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Apple’s (NASDAQ:AAPL) sudden executive shake-up has taken a lot of people by surprise and there are obvious concerns of possible instability at the company. However, according to Sterne Agee analyst Shaw Wu, the management stir-up will actually be good for Apple.
Apple announced on Monday that two of its top executives, iOS chief Scott Forstall and retail head John Browett, will exit and other managers will take on new responsibilities. Craig Federighi, the Mac software engineering head, will take over at the iOS software unit, while Internet software and services chief Eddy Cue will oversee Siri and Maps. Jony Ive and Bob Mansfield will also receive expanded roles.
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“We believe these moves make sense in promoting more collaboration but are still somewhat surprised with the sudden demotion of Scott Forstall,” Wu said, according to the Mac Observer. “But at the same time, we don’t think it will be a big deal as the company has arguably not missed a beat despite senior departures in the past, showing the resilience of Apple’s mission and culture.”
Forstall is said to have been asked to leave because he refused to add his name to the public letter of apology the company sent out after facing criticism for its maps app, a project of the iOS team. Apple replaced Google’s (NASDAQ:GOOG) maps app with its own in September, but has received primarily bad reviews. Browett, who only joined the company in April, was reportedly dismissed for the several mistakes he made during his short stint.
Wu, who has a Buy rating and price target of $840 on Apple’s stock, said he believed the Maps issues may have been the catalyst for Forstall’s departure. “We believe what may have triggered this is the less than stellar rollout of Apple’s new Maps app,” the analyst said.
“It is an ambitious effort replacing Google Maps and bringing new functionality including turn-by-turn navigation and 3G photo-realistic rendering. We find it unfortunate that Scott Forstall may be taking the fall for this. As we have said before, we have high confidence that the Maps app is fixable as it is software and will get better over time as more data is collected. People forget that Google Maps started out inferior to Yahoo (NASDAQ:YHOO) Maps and Mapquest.”
Wu added that he did not expect Apple to go through any period of turmoil and that the company was strong enough to move forward. “We would like to note that this isn’t the first time that senior executives have departed the company … and the company has arguably not missed a beat. We believe this is a testament to Apple’s strong culture that continues to endure despite changes in personnel through the years.”
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