Apple CEO Tim Cook calls doom and gloom 'huge overreaction,' turns sights to India
In an exclusive one-on-one interview with CNBC's Jim Cramer on Monday, Apple CEO Tim Cook said concerns that the company's best days are behind it are overblown, citing optimism in China and areas of huge growth potential like India.
Cook offered little in the way of new information during today's broadcast, instead reiterating international growth opportunities and an "exciting" upcoming product pipeline. As expected, a majority of the show focused on iPhone, Apple's bread-and-butter segment that last quarter saw its first ever year-on-year sales slowdown. For the second quarter of 2016, iPhone sales dipped to 51.2 million devices, pulling revenue down to $50.6 billion.
Like he did during an earnings conference call last week, Cook said the contraction was in large part due to comparatively slow upgrade rates, tough compares and macroeconomic headwinds, the latter of which impacted growth markets like China. Despite the decline, iPhone is performing well with switchers, or users who moved to Apple's ecosystem from platforms like Android. In China, for example, switch rates were up 40 percent for the first half of 2016.
While numbers were down year-over-year, China posted a "huge quarter" by absolute standards, which account for exchange rates and economic headwinds. In constant currency, Apple's Greater China business has grown 70 percent over the past two years, Cook said.
Interestingly, Cook more than once brought up Apple's prospects in India, saying this year's regional LTE rollout could play big for iPhone. Traditionally, Indian consumers shy away from premium smartphones, opting instead for budget devices running some flavor of Android. But Cook believes change is in the wind. About half of India's population is 25 years old or younger, a demographic Cook said is keen on buying "the best" products available. With LTE penetration at near zero, wireless customers didn't have a compelling reason to buy iPhone, but that too will change.
Looking at mature markets like the U.S. and Europe, the Apple chief expressed confidence in future upgrade cycles without revealing any juicy details. Cramer asked what Apple would include in a new iPhone that would make him need, not simply want, a new one, alluding to concerns that the company can no longer innovate.
"We're going to give you things you can't live without that you don't know you need today," Cook said.
On services, Cook commented on platform stickiness, saying ecosystem buy-in doesn't stop with hardware. Devices like iPhone and iPad are gateways to services purchases, from iCloud storage to apps, movies and music.
Finally, Cook addressed new product "flops" like Apple Watch, saying users will one day wonder how they ever survived without one. Commenting on lower than expected shipments -- estimates Apple never released -- he noted that Apple Watch is available in 14,000 locations, which compares to 200,000 for iPhone. The company is still in "learning mode" when it comes to wearables, but Cook is optimistic that Watch will one day be as pervasive as iPod and iPhone, products that got off to a slow start but are retrospectively viewed as overnight successes.
Cook offered little in the way of new information during today's broadcast, instead reiterating international growth opportunities and an "exciting" upcoming product pipeline. As expected, a majority of the show focused on iPhone, Apple's bread-and-butter segment that last quarter saw its first ever year-on-year sales slowdown. For the second quarter of 2016, iPhone sales dipped to 51.2 million devices, pulling revenue down to $50.6 billion.
Like he did during an earnings conference call last week, Cook said the contraction was in large part due to comparatively slow upgrade rates, tough compares and macroeconomic headwinds, the latter of which impacted growth markets like China. Despite the decline, iPhone is performing well with switchers, or users who moved to Apple's ecosystem from platforms like Android. In China, for example, switch rates were up 40 percent for the first half of 2016.
While numbers were down year-over-year, China posted a "huge quarter" by absolute standards, which account for exchange rates and economic headwinds. In constant currency, Apple's Greater China business has grown 70 percent over the past two years, Cook said.
Interestingly, Cook more than once brought up Apple's prospects in India, saying this year's regional LTE rollout could play big for iPhone. Traditionally, Indian consumers shy away from premium smartphones, opting instead for budget devices running some flavor of Android. But Cook believes change is in the wind. About half of India's population is 25 years old or younger, a demographic Cook said is keen on buying "the best" products available. With LTE penetration at near zero, wireless customers didn't have a compelling reason to buy iPhone, but that too will change.
Looking at mature markets like the U.S. and Europe, the Apple chief expressed confidence in future upgrade cycles without revealing any juicy details. Cramer asked what Apple would include in a new iPhone that would make him need, not simply want, a new one, alluding to concerns that the company can no longer innovate.
"We're going to give you things you can't live without that you don't know you need today," Cook said.
On services, Cook commented on platform stickiness, saying ecosystem buy-in doesn't stop with hardware. Devices like iPhone and iPad are gateways to services purchases, from iCloud storage to apps, movies and music.
Finally, Cook addressed new product "flops" like Apple Watch, saying users will one day wonder how they ever survived without one. Commenting on lower than expected shipments -- estimates Apple never released -- he noted that Apple Watch is available in 14,000 locations, which compares to 200,000 for iPhone. The company is still in "learning mode" when it comes to wearables, but Cook is optimistic that Watch will one day be as pervasive as iPod and iPhone, products that got off to a slow start but are retrospectively viewed as overnight successes.
Comments
Just downright awkward.
Might you have any thoughts or insights to add on the status of Apple / Cook & Team?
Over the last four decades nobody thought apple products were that revolutionary, in the beginning. (1)PC (2) Window (3) mouse and you know the rest.
Real problem for apple is the relentless pursuit by its imitators which try to bring products before they are ready which explains why Cook is so secretive.
Revolutionary products take time to develop. Secretive does not equate non-innovative.
Remember Coke has not had second "successful revolutionary product" How about Clorox? Look at their valuation compared to apple.
However, it's not Apple that has changed. It has never talked about unannounced products. It has never released a new product category that didn't get slammed in the media as non-innovative. This whole assertion that Apple has lost its ability to innovate is a bit suspect, but whatever.
The best advice was Cramer's last line. Own it, don't trade it. I guess I'm lucky because I care about AAPL's value in the next 15-20 years, not the next 15-20 days.
So no, there is no regulation banning Cook from doing this interview beforehand per se, but it would absolutely be a terrible business practice to do so.
http://lefsetz.com/wordpress/2016/04/27/apples-numbers/
problem is that no one can come up with a specific person to lead a company as unique as Apple
enjoyed under Cook?
https://en.m.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses
So let's all RELAX, and look at things with a little more long-term perspective.