The former Black Cats manager feels O'Neill had the experience to get the club back on track.
He told Absolute Radio: "I was surprised because I don't think they've been playing great, but Martin O'Neil has got vast, vast experience and it comes as a shock, I think the draw against Norwich with ten men, has the owner panicked..?
"I mean sometimes you've got to look at players, the boy Johnson's a great player, McClean who had a great season last year, in there, has been found wanting, Cattermole's got injured, you know, whether Paolo Di Canio can fire them up, that's another question, but I tell you what, he's got a hell of a start hasn't he, Chelsea away and then Newcastle.
"...I'll just come back to the Norwich game, not winning that one, I know the Chelsea game and Newcastle game, but I think they've got the likes of Everton, Stoke and Southampton after that, now THEY are games where they're going to have to get points out of them."
Reid was talking to Ian Wright of Absolute Radio Rock n' Roll Football. Every Saturday from 5pm on 1215AM. For more, visit absoluteradio.co.uk/football.