Can This Exec Fill Scott Forstall's Shoes at Apple?

After 15 years at Apple (Nasdaq: AAPL  ) , iOS chief Scott Forstall is on his way out in a massive management change announced earlier this week intended to boost collaboration within the company. Forstall rose through the ranks but made enemies along the way, particularly among the executive ranks. Steve Jobs always had a fondness for him and thus protected him, but those days are in the rearview mirror.

Forstall has led the development of iOS from the get-go, the operating system that powers the iDevices that are of paramount importance to Apple's success. The disproportionate weight that these gadgets carry relative to overall results cannot be overstated.

Source: SEC filings.

Just the iPhone and iPad combined have generated trailing-12-month sales of $112.9 billion, which comes out to 72% of total TTM sales. With the father of iOS being shown the door, those are big shoes to fill.

Three's company
Within upper level management, Forstall's responsibilities are now being chopped up among three other execs: Jony Ive of industrial design, Eddy Cue of Internet services, and Craig Federighi of Mac software. Ive will now provide direction for human interface, while Siri and Maps are going to Cue's jurisdiction. However, the bulk of iOS development is now being rolled into Federighi's department, even though he's a relative newcomer to the top.

Early last year, Apple's senior VP of Mac software Bertrand Serlet left the company. He was widely viewed as the father of OS X and actually left a day before the operating system he built enjoyed its tenth birthday. Like Forstall, both Federighi and Serlet came to Apple through its acquisition of NeXT, the same deal that brought Jobs back to the company he co-founded. Federighi left Apple, only to return in 2009.

Source: Apple.

When Serlet stepped down in March 2011, Federighi, then just a regular VP, succeeded him and has played an integral role shipping OS X verions Snow Leopard, Lion, and Mountain Lion. It wasn't until just two months ago that Federighi was promoted to upper-level management, adding a "senior" to his VP title and now bumping elbows with the rest of the Apple elite.

As such, Federighi is now subject to SEC reporting requirements and filed a Form 3, an initial statement of beneficial ownership. It showed that he was the happy recipient of a 75,000 restricted stock unit, or RSU, grant to welcome him to the new role, adding to the 61,250 RSUs he already had and 8,000 shares held directly at the time. Since then, some of these RSUs from older grants have vested, and he subsequently surrendered some for tax liabilities. Including direct shares and RSUs, he now has a stake of about 140,000 shares -- almost $85 million based on Friday's close.

Federighi! Federighi! He's our man! If he can't do it... Apple's screwed
Both iOS and OS X are now under the same umbrella: Federighi's. That's a lot of responsibility for an exec that's only been around since 2009, after a hiatus. Although, having both operating systems under the same roof should accelerate the broader trend we've been witnessing in computing where desktop and mobile operating systems are converging.

Microsoft (Nasdaq: MSFT  ) is taking that notion to the extreme, since Windows 8, Windows RT, and Windows Phone 8 all share a common interface and a technical foundation and distinguishing between them can be rather confusing for the average consumer. Still, it's happening, and consumers had better get used to it.

In recent years, Apple has continued to bring iOS features to OS X, so consolidating the teams makes some sense. Federighi has a strong background, working at NeXT before spending 10 years at Ariba, including as CTO. Software is a key aspect of Apple's strategy, especially when it comes to iOS, and the pressure will be on for him to continue pushing innovation.

If Federighi can't do it, Apple's screwed.

With the near-term uncertainties created by the shake-up, now's as good a time as any to read up on Apple's long-term fundamentals and its biggest opportunities. The Motley Fool has laid it all out for current or prospective shareholders in a new premium research service all about Apple. Get started by clicking here

Evan Niu, CFA, owns shares of Apple. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services recommend Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 31, 2012, at 6:44 PM, FreeRange1 wrote:

    Where do these writers come up with this sensationalist crap? "Massive management change"? Really? NO! It was just two people, both of whom had to go.

    Just two people were let go - one, the new head of retail who was kicked out the door after only 6 months because he was a horrible fit and screwing up Apple's award winning retail operations and customer service.

    The other was Forstall. For anyone who closely watches this company, and who even remotely knows what they are talking about, this was a great move. He was a disruptive force within the management ranks who was actually holding back innovation.

    These are excellent moves by Cook and show that Cook is firmly in control, is decisive and can lead this company effectively. Kudos!

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