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Apple Inc. AAPL -0.22% is shaking up leadership and reordering priorities across its services, artificial intelligence, hardware and retail divisions as it works to reduce the company’s reliance on iPhone sales.

The changes, which can be traced back to last year, have included high-profile hires, noteworthy departures, meaningful promotions and consequential restructurings. They have rattled rank-and-file employees unaccustomed to frequent leadership changes and led Apple to put several projects on hold while new managers are given a chance to reassess priorities, according to people familiar with the matter.

The primary reasons for the shifts vary by division. But collectively, they reflect Apple’s efforts to transition from an iPhone-driven company into one where growth flows from services and potentially transformative technologies.

Leadership moves of the past few months include promoting artificial intelligence chief John Giannandrea to the executive team; replacing departing retail chief Angela Ahrendts with head of human resources Deirdre O’Brien; and pushing out top Siri voice-assistant executive Bill Stasior.

Apple has also trimmed 200 staffers from its autonomous-vehicle project, and is redirecting much of the engineering resources in its services business, led by Eddy Cue, into efforts around Hollywood programming.

“This is a sign the company is trying to get the formula right for the next decade,” said Gene Munster, a longtime Apple analyst and managing partner at venture-capital firm Loup Ventures. “Technology is evolving, and they need to continue to tweak their structure to be sure they’re on the right curve.”

The changes, along with Apple’s recent sales woes, have become conversation fodder for current and ex-Apple employees, partly because they are among the most pronounced since Tim Cook’s early years as chief executive. Retail chief Ron Johnson left shortly before Mr. Cook took over in 2011, and mobile software executive Scott Forstall was dismissed a year later. Their departures led to the hiring of Ms. Ahrendts, the elevation of Craig Federighi to the top software job and Mr. Cue’s assumption of responsibility for several services, creating an 11-person executive team that remained largely unchanged for five years.

The competitive landscape could complicate Apple’s efforts to diversify beyond the iPhone. Media services like Netflix Inc. and Spotify Technology SA have a head start and more subscribers; Google’s autonomous-vehicle initiative has logged more miles on the road; and Amazon.com Inc.’s Echo speakers have put Alexa into millions of homes.

Apple spent $14.24 billion on research and development last year, a 23% increase from the year prior. Though it continues to work on projects in the augmented reality, autonomous vehicle and health sectors, it hasn’t yet released a major new product in those areas. Sales of its latest gadgets—Apple Watch, AirPods and HomePod—have been mixed, and none has offered the pricing power or volumes of the iPhone, one of the best-selling products in history.

Mr. Cook, who prides himself on his long-term management focus, has been anticipating the maturation of the smartphone industry since as early as 2010 and planning for how to grow as phone sales slow, former employees say. Apple this year stopped reporting the number of iPhones it sells, a move many observers interpreted as an end of the smartphone salad days.

Though the iPhone still contributes about two-thirds of Apple sales, the company has encouraged investors to focus on a growing services business, which includes streaming-music subscriptions, app-store sales and mobile payments. Services are expected to top $50 billion in sales by fiscal 2020 and contribute more than about 60% of Apple’s total revenue growth over five years, according to Morgan Stanley , which estimates the iPhone fueled 85% of growth during the prior five years.

The services business also is key to preserving iPhone loyalty. Just as Amazon has used media and music offerings to increase the value of Prime membership, Apple executives view its mobile payments, music service and coming video offering as ways to encourage current iPhone owners to buy future Apple handsets.

Apple has said it aims to pass 500 million paid subscriptions across its platform by 2020, up from 360 million now.

To help reach the goal, Apple is spending more than $1 billion to create original shows this year starring Hollywood A-listers such as Reese Witherspoon. It has considered bundling video into a monthly subscription offering that would also include cloud storage, according to people familiar with the plans. The company also is in talks with major newspapers about offering a news service that would cost $10 a month. It has discussed bundling those services together into a single subscription along with iCloud storage for photos and files, a person familiar with the plan said.

Mr. Cue, who poached two top executives from Sony Pictures Television in 2017, has focused most of his engineers on the coming video offering, two of these people said. The company is pushing to announce the new offering at a media event scheduled for March 25 on its Apple Park campus, people familiar with the event said.

Apple is also expected to lean on its artificial-intelligence team to personalize the services on people’s devices. The company last year hired Mr. Giannandrea away from Alphabet Inc.’s Google, where he held a similar role incorporating AI into products like Gmail’s inbox app.

In December, shortly after presenting to Apple’s board, Mr. Giannandrea was promoted to the company’s executive team and quickly took over the AI division. He relieved Mr. Stasior from his responsibility overseeing Siri, Apple’s flagship AI product, according to people familiar with the change. Mr. Giannandrea has assumed that responsibility and is looking to improve Siri’s accuracy and performance, the people said. The Information earlier reported on Mr. Stasior’s status.

In August, Apple hired Tesla Inc.’s engineering chief Doug Field and gave him day-to-day responsibility for the company’s roughly 1,400-person autonomous-vehicle project, known as Project Titan. Last month, he cut the team by about 200 people, according to people familiar with the change, which was previously reported by CNBC.

Apple announced in early February that Ms. Ahrendts would leave the company in April, ending a five-year stint overseeing its 500-plus stores world-wide. Mr. Cook promoted Ms. O’Brien, a longtime operations executive, into a role of completing Ms. Ahrendts’s store remodelings and determining how Apple promotes services in stores. One planned initiative: Apple has promised production partners in Hollywood that it will install TVs in stores to showcase its slate of forthcoming shows, people familiar with those plans said.

The student-loan servicer says $12.50-a-share proposal is too low

Navient Corp. NAVI 0.95% has received a buyout offer worth about $3.2 billion from a pair of investors that the student-loan servicer rejected as too low.

Navient’s board voted Monday to turn down the $12.50-a-share proposal from hedge fund Canyon Capital Advisors LLC and private-equity firm Platinum Equity Advisors LLC, believing it undervalues the company and is lacking in other ways, people familiar with the matter said.

The offer represents a 6.6% premium over Navient’s most recent closing price Friday of $11.73 a share. Navient’s advisers had told Canyon it would require a price of more than $15, the people said. Navient has a market value of about $3 billion.

Canyon is a longtime Navient shareholder with about a 9.9% stake, according to FactSet. Platinum is a Los Angeles-based private-equity firm.

Wilmington, Del.-based Navient services student loans. Like other servicers, its business practices have been heavily scrutinized in recent years as millions of Americans struggle with student-loan debt. The Consumer Financial Protection Bureau and several state Attorneys General have accused Navient of misleading borrowers about how to repay their loans. Navient has said the allegations are false and it is defending itself in court.

One of Navient’s complaints about the offer is that it doesn’t address how to deal with the company’s lawsuits and regulatory matters, the people said. The bidders also don’t appear to have a plan for roughly $10 billion of Navient’s debt that could come due in a change of control, they said.

Rakesh Kapoor’s legacy includes a restructuring that looks rather like a time-delayed break-up

Rakesh Kapoor introduces Adrian Hennah as both a “rock” and a “rock star”. The finance director epitomises solidity rather more obviously than showmanship. With Mr Kapoor stepping down as chief executive of Reckitt Benckiser, resilience will be de rigueur at the big consumer goods group. Mr Kapoor’s legacy includes a restructuring that looks rather like a time-delayed break-up.

Investors were more focused on margins as the owner of brands such as Nurofen and Calgon reported full-year results. Reckitt turns sales into profits at a rate that leaves rivals in the dust. The adjusted operating margin only slipped 60 basis points to 26.7 per cent. Messrs Kapoor and Hennah forestalled fears this marked the start of an unstoppable trend. The shares duly bounced 4 per cent.

That lifted Reckitt’s enterprise value to £55bn, within spitting difference of a £57bn sum-of-the-parts valuation from Jefferies last summer. Rival brokers have generated similar numbers, imputing higher or lower earnings multiples for such component businesses as headache cures and baby formula. In general, the conclusion of such counterfactual exercises at a multinational is usually that it would be worth more to investors if it demerged Parts A and B.

This would become easier for Reckitt in 2020, following a bifurcation within the Reckitt wrapper. The group will then consist of a Health division, selling such remedies as Mucinex for colds, and Hygiene and Home, with products supposed to stop customers getting ill in the first place.

Mr Kapoor’s bet, as he quits the field of play, is presumably that no demerger will be required, because the value of Reckitt businesses will already be in the stock price. Margins matter here because profitability is lower at HyHo, as Reckitt’s lesser division is known in unwitting tribute to Disney’s Seven Dwarfs.

This may hold back shares currently trading at 18 times forward earnings. If so, Mr Kapoor’s successor may face calls for the sale of divisions at prices lifted by trade buyers’ scope for big cost savings. That would be an affliction no mere sniffle remedy could cure. Call it a hospital pass.

Why SocGen’s Oudéa is on borrowed time as Europe’s longest-serving bank boss

French bank has underperformed since 2008 while rival JPMorgan Chase has enjoyed succes

 

Cross the Atlantic, and the only bank boss to rival Mr Dimon’s longevity is Frédéric Oudéa of Société Générale. It is a telling reflection of the outperformance that US banks have racked up over European rivals that SocGen’s share price performance during Mr Oudéa’s nearly 11 years in charge is a decline of 67 per cent, with a negative TSR of 54 per cent.

 

It is timely to consider this for two reasons. Last week SocGen shares slumped again when the bank warned on profits after failing to hit over-ambitious targets. And within three months shareholders will be asked to extend Mr Oudéa’s tenure as CEO for another four years. Should they?

 

It is harsh to judge SocGen against JPMorgan, a bank that is one of the biggest success stories of the past decade. All of Europe’s major lenders have performed pretty poorly since the financial crisis, hurt by regulation, indecisive intervention from policymakers and a weak operating environment.

 

There has been a lot of focus on the woes of Deutsche Bank of late, thanks to repeated scandals, a slump at its once crown-jewel investment bank and a jump in its cost of funding. What is less appreciated is that among EU peers SocGen is second only to Deutsche in terms of share price underperformance over Mr Oudéa’s time in charge.

 

It did not start out this way. And indeed a key reason for the 55-year-old’s longevity is gratitude that in his early years in the job he guided the bank through three existential challenges in quick succession.

 

Back in mid-2008 he took a battlefield promotion and helped the bank survive first the €4.9bn rogue trading scandal that saw his predecessor ousted, then the global financial crisis that peaked only a few months later, and finally the eurozone extension of that crisis. This dragged on through 2012, during which time the bank’s reliance for financing on spooked US money market funds was particularly alarming.

 

His meld of determined leadership, financial expertise gained as the bank’s former finance director and political connections forged in the 1990s when he worked closely in government with the subsequent president, Nicolas Sarkozy, helped to bring the bank back from the brink.

 

Of late there has been some operational improvement, too. SocGen’s international business once looked like a tragicomic parallel of geopolitical tensions. with outposts in Egypt, Greece and Russia, all hit hard by crises in those countries. But at the last count the international unit made an 18 per cent return.

 

Another factor supporting Mr Oudéa’s lengthy presence at the helm has been his reputation as a decent human being — an underrated virtue in an era of bank scandals. SocGen has hardly been scandal-free: most recently it was fined $1.3bn late last year for US sanctions violations. But Mr Oudéa has helped clean it up. Compared to many peers, it now looks almost angelic. In a recent note, analysts at Keefe, Bruyette & Woods cite “no material litigation in the pipeline” as one of three reasons to be bullish about SocGen.

 

Sadly for Mr Oudéa, that same KBW note cites 11 reasons to be bearish — among them a measly capital buffer below most peers and declining revenue and profitability in core areas. This month, alongside its profit warning, the group outlined plans to restructure its investment bank with €500m of extra cost cuts. Mr Oudéa blamed a “less favourable . . . political, financial [and] economic environment”. A thorough plan to digitise the bank’s still branch-heavy retail bank is expected soon.

 

Despite the share price performance, Mr Oudéa has been understandably keen to stay on in his job and reap the benefits of repair work that he believes have yet to feed through to the bottom line or the stock valuation. Net profits were up 38 per cent last year at almost double the level when he took over in 2008. But its 7.1 per cent return on equity still trails its cost of capital and its main French rival BNP Paribas.

 

The SocGen boss is said to have the backing of the whole board. And for now at least, leading investors such as BlackRock seem patient enough. But 11 years and counting is a long time to wait for an end to underperformance. The board should start some serious succession planning.