Apple's Cook on defensive but brushes off lawsuit
Disappoints those who thought CEO's rare keynote would reveal plans for the $37bn cash pile, or for new iPhones
Published: 12 February, 2013
Apple CEO Tim Cook's keynote address at a Goldman Sachs conference on Tuesday was eagerly hyped-up to be where we would find out how the firm planned to spend its cash mountain - much in the news this week because of shareholder lawsuit - or even details of its product roadmap. Neither materialized, and Cook mainly used the slot to go into defensive mode, insisting Apple still had its magic, had never been so innovative, and had only failed to make major acquisitions because no prey lived up to its standards.
The defensiveness came from a couple of months of unusual pressure on the Apple stock, amid questions over its loss of market share to Samsung in some areas (most seriously China); its apparent failure to come up with anything radically new in the smartphone segment; and most recently, a lawsuit by David Einhorn's Greenlight Capital hedge fund.
This action calls for Apple to use some of its $237.1bn cash and securities pile for preferred stock, claiming the iPhone maker has a "Depression era mindset" which is too financially conservative. Cook denounced the lawsuit as a "silly sideshow" and noted that his firm invested about $10bn in capex last year and plans to do about the same in 2013, plus investments in stores, distribution, R&D, supply chain and acquisitions. "I don't know how a company with a Depression era mindset would have done all those things," he told the conference, though he also insisted the Apple management and board were in "very active discussions" about how to give more cash to shareholders, including Greenlight's preferred method of distributing preferred stock to current owners.
Cook added that Apple sometimes considers major acquisitions, but has usually stuck with smaller deals because the large firms "didn't pass our test for various reasons, and we've looked at more than one." He added: "Would we look again? I'm sure we will.... We want to make great products. If a large company could help us do that even better, then that's of interest. But deliberate, thoughtful is our mantra. Cash is not burning a hole in our pocket."
He also addressed criticisms that Apple is no longer an innovator and is failing to come up with magic products any more, though he would not address specific product plans, even the most hotly discussed of the moment - a low cost iPhone, to fend off Samsung in emerging markets, and the much rumored 'iWatch'. He did drop some hints that a mass market iPhone could be on the horizon, pointing out that the handset was not yet available to half the world's potential subscribers. "I've also seen markets where we haven't done too well, and I view that as opportunity, not the glass is half empty," he added.
Mainly sticking to generics, he said Apple had a culture which saw no limits to its products or the future of its business. "It's because of that that Apple's been able to do so many things for so many years, and do things that people didn't know they wanted and now can't live without," he said. "We don't think of the world with limits."