Transcript of Tim Cook Interview at Goldman Sachs’ Conference – February12, 2013
- Staff
- February 12, 2013
Transcript of Tim Cook Interview at Goldman Sachs’ Conference
The Wall Street Journal has a full transcript of Tim Cook’s talk at a Goldman Sachs conference earlier today.
Here are some of the interesting bits:
Tim Cook on Apple’s Cash Pile:
[quote] You really want to get started. Apple doesn’t have a depression-era mentality. Apple makes bold and ambitious bets on product and we’re conservative financially. If you look at what we’ve done in terms of investment, last year we invested $10 billion in CapEx. We think we’re gonna do a similar amount this year. We’re investing in retail around the world, in product innovation, in new product, in supply chain. We’re acquiring some companies. My definition of a depression-era mentality wouldn’t be of a company investing a pair of tens over two years. To add to that fact, we’re returning $45 billion to shareholders through a combination of dividends and buybacks. I don’t know how a mentality with a depression-era mindset would have done all those things.
Now, we do have a lot of cash… Last quarter alone the cash flow from operations was over $23 billion. It’s an incredible privilege where we can seriously consider returning additional cash to our shareholders. The management team and the board are in very active discussions. That’s what our shareholders want.[/quote]
Tim Cook on Einhorn’s Lawsuit:
[quote] I find it bizarre we find ourselves being sued for doing something that’s good for shareholders. It’s a silly sideshow, honestly. I think it would be a lot better use of funds to donate that time and money to a worthy cause. You’re not gonna see us do campaign mailing, you’re not gonna see a yes on 2″ in my front yard. This is a waste of shareholder money, it’s a distraction, and it’s not a seminal issue for Apple.
I supported Prop 2, I’m gonna support it. It’s not something we’re going to spin cycles on. The serious issue on hand is the return of cash: how to do it, how much to do, and we’re very serious about that. But this Prop 2 thing is a silly sideshow. We feel so strongly for Apple that shareholders should approve any issuance of preferred stock.[/quote]
Tim Cook on Apple’s culture of innovation:
[quote] It’s never been stronger. Innovation is so deeply embedded in Apple’s culture. The boldness, ambition, belief there aren’t limits, a desire to make the very best products in the world. It’s the strongest ever. It’s in the DNA of the company.
If you look at some essentials, there’s no formula. If there was a formula, a lot of companies would have bought their ability to innovate. Some essentials are skills and leadership.
If you look at skills, Apple is in a unique and unrivaled position. Apple has skills in software, in hardware, and in services. The model of the PC industry, that model’s not working for what consumers want today. Consumers want an elegant experience where the technology flows to the background. The real magic happens at the intersection of these, and Apple has the ability on all three of these spheres to innovate like crazy and really cause magic.[/quote]
Tim Cook on market share and Apple’s momentum:
[quote] There’s that word limit. We don’t have that in Apple’s vocabulary. When I zoom out and look at the smartphone market in particular, what I see is a market that is projected to double in the next few years. This is a huge market. On a longer-term basis, all phones will be smartphones and there’s a lot more people in the world than 1.4 billion, and people love to upgrade their phones very regularly.
Over 40% of that 500 million happened over last year. Across that period of time, we built an ecosystem that is the best in customer experience on the planet. In addition, it’s fueling an incredible economic gain for developers. We’ve paid over $8 billion to developers.[/quote]
Tim Cook on China:
[quote] “When I look at what Apple has done in China, I think it’s hard for anyone to evaluate and say it’s not impressive. The company has gone from a few hundred million in revenue in one year to $3 billion in the next to $13 billion the next… we’re adding over $10 billion every year.”[/quote]
Tim Cook on a cheaper iPhone and iPhone 4 demand:
[quote] This is a popular question. Our north star is great product. When everyone comes to work every day, they’re thinking about that front and center. We wouldn’t do anything we wouldn’t consider a great product. There are other companies that do that, and that’s just not who we are.
That said, if you look at what we’ve done to appeal to people who are more price sensitive, we lowered the price for iPhone 4 and iPhone 4S, and in the December quarter, we didn’t have enough supply of iPhone 4, so it surprised us as to the level of demand we had for it.
We are making moves to make things more affordable. When we came out with iPod it was $399, today you can buy an iPod Shuffle for $49. Instead of saying how can we cheapen this iPod to get it lower, we said how can we do a great product, and we were able to do that. The same thing, but in a different concept in some ways.[/quote]
Tim Cook on building a cheaper Mac:
[quote] We concluded we couldn’t do a great product, but what did we do — we invented iPad. Now all of the sudden we have an incredible experience and it starts at $329. Sometimes you can take the issue and you can solve it in different ways.[/quote]
Tim Cook on iPad going forward?
[quote] The tablet market will be huge, it will be a huge opportunity for Apple. It’s one of those areas showing software, hardware, services being integrated and creating an experience that is jaw-dropping. To put the 23 million in context, HP in that same quarter sold 15 million PCs. If you look at the full year last year, there were more iPads sold than HP sold of its entire PC line-up. There has been a sea-change. We’re in the early innings of this game. The projection is that this is going to triple in 4 years. When you think about that, the actual number is 375 million, that’s more PCs than are being sold around the world. The tablet is attracting people who have never owned a PC and people who have owned them but aren’t great in the experience.
On the tablet, you can see the whole of Apple coming out here. I have no idea what market share is, we’re the only company that really reports the units we sell.[/quote]
Tim Cook on Apple’s Software and Services Business:
[quote] Last quarter, if you looked at our software and services revenue, it was $3.7 billion. If you look at that versus software and services companies, that’s an incredible amount of revenue.
Because we’re not a hardware company, there are other things we’re doing and could do to have revenues and profits flow. We don’t look at the sale of a product as our last part of the relationship with the customer, it’s the first. We are very focused on that. There’s also financial benefit on doing that. Being larger than a hardware company affords us the ability to not worry about so much in the short term. We’re managing Apple for the long term. I know people care about quarters and so forth and we care, but the decisions we make, the profound decisions we make, are for Apple’s long-term health. Not the short-term 90-day clock.[/quote]
Source: The Wall Street Journal
