Apple CEO Tim Cook: defensive, prescient, or business as usual?

Apple CEO Tim Cook: defensive, prescient, or business as usual?

Summary: As investors gain the upper hand against his company, the chief executive spent the morning at a Goldman Sachs conference explaining its inner workings. From his perch, it's smooth sailing.

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Let's not discuss Wall Street's latest pounding of Apple stock. No, let's not talk about that. Let's instead talk about how brilliant, how sophisticated, how exceedingly profitable the world's leading technology company is. Yes, let's talk about it.

And chief executive Tim Cook will oblige. If there's anyone who knows how this company runs -- the frequency at which it hums as it rakes in billions of dollars each quarter -- it's the man who spent a decade managing the company's jealousy-inducing operations.

Today, Cook spent the morning calmly discussing this at this year's Goldman Sachs Technology and Internet conference in San Francisco. Cook addressed the company's culture of innovation -- "unrivaled," he said -- and its ongoing, perhaps existential struggle to live up to the record growth it has enjoyed over the last decade.

Growth for its cash cow, the iPhone? "All phones will be smartphones," Cook said.

The company's ongoing efforts to attract customers at lower price points? "We wouldn't do anything we considered a cheap product," Cook said.

The cannibalization of the iPad and iPad mini? "I think this is going to be the mother of all markets," he said of the latter.

Apple's ongoing fixation with hardware? "If you look at [Apple's $3.7 billion in software & services revenues last quarter] versus software and services companies, it's an incredible amount of revenue."

And what about that pricey network of stores? "I don't think we would have been nearly as successful with iPad if it weren't for our stores," Cook said.

And acquisitions? "We've averaged an acquisition almost every other month (for the last three years)," Cook said, adding that it's generally for skills or intellectual property.

So the answer to the admittedly aggressive question in the headline is simple: it depends on how you look at it. Are you an investor, or not?

To the naysayers, Cook spent the morning justifying his management of the company -- "We're managing Apple for the long term," he said, as the stock market beats him over the head -- and opening the drapes a bit so investors can see how the magical money-making machine really works. In one sense, this is defensive, and part of being CEO. It is difficult to imagine Cook speaking in a session like this when the company's stock is enjoying record highs. (Other companies in attendance at Goldman's conference: Lexmark, Yahoo, VMware, Polycom.) At times, it seemed as if Cook was baffled that investors would penalize his company for executing on most of its industry-leading strategy. Or simply weary of the irrationality of quarterly thinking.

So he took the time to methodically outline how strong Apple is as a company. He didn't resort to too many platitudes, despite the quotes above, and his responses did not have a reactionary tone. He addressed the company's various ventures, how they all help drive the company forward in the same direction, and how they all make significant money along the way.

For example, Cook's response about the Apple Store network helped explain why the company's latest products -- new, then-market-untested form factors such as its iPad tablet computer -- did so well: people could go and touch them. In this way, the Apple Stores are -- like the products themselves, the customer service, the website, the marketing -- yet another way for Apple to manage the customer experience. They are not simply a distribution channel, or a point of sales. That's the driving mission behind them.

The same goes for Cook's discussion of Apple's software and services dominance. "We're not a hardware company," Cook said flatly at one point, suggesting that onlookers don't fully understand the potential of its virtual product pipeline. To an investor, this looks like an unfulfilled promise for things to come. To a regular observer, it just looks like Cook is doing what he's always done: executing better than everyone else, no voodoo tricks necessary.

Photo: CBS Interactive

Topics: Tech Industry, Apple, iPhone, iPad, Mobility, Smartphones

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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11 comments
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  • Apple is making record profits, record sales and showing

    record growth, but like a good member of the merchants of chaos crowd, you are obsessed over the stock price. News flash for you, a major stock crash is coming and it has nothing to do with Apple. The market is currently being artificially propped by the Fed, and when that bubble bursts, it's going to make the housing bubble look like a walk in the park.
    baggins_z
    • A bit pessimistic?

      Apple's stock was artificially high; the company's growth was unbelievable over the last decade, and a lot of people wanted to get rich along with apple, most of them without actually contributing anything. Just like the housing collapse of 2008 they all invested on the premise that the price will keep going up, but all knew it was already too high. At some point it has to stabalise (drop) and no one wanted to be the last guy to realise. Why did the pricier after record back to back quarters? The market know absolutely nothing about apple and they don't want to. They only care about the price and getting out at the right time. A lot of people have lost a lot of money in the last two months.... None of those people are at apple.
      MarknWill
      • No, realistic. Stock market performance

        is completely disconnected from the current economic performance. You don't get record Dow Jones averages with negative GDP growth. It's a fact that the Fed has been pumping money into buying stocks (what do you think Quantitative Easing was). This is an attempt to minimize the inflation that occurs whenever you pump a money supply. It worked. You aren't seeing monetary inflation, you are seeing stock inflation.
        baggins_z
        • Well yeah...

          If they cut all funding unannounced tomorrow in one cut off...

          But the whole point is to keep stocks and cash in your pocket moving; discourage you from just stockpiling your pennies through the winter so spring arrives faster. The whole point of the policies is to ease the entire financial market; thereby it is most likely to be phased out rather than pulled out from under you. It's not a perfect system, but there has had to be some form of quantitive easing after 2008, just like china had had to act to control inflation.
          MarknWill
  • What I love is this simple fact.

    In 3 years, Apple has grown the iPad business to be just a tad under the size of all of Google (minus Motorola revenues). By the end of the year (given the iPad continues its 60% YoY daily sales growth), just the iPad will be a bigger business in terms of revenue that all of Google.

    It took Google a bit over 15 years to get to that point. It took just the iPad a bit over 3 years to get there.

    But Apple is no longer a growth company?
    Bruizer
    • What is 60% YOY daily sales growth?

      Its a nonsense term, trying to imply that evrey day Apple sales grow 60%.
      radleym
    • Re: But Apple is no longer a growth company?

      Well, they have started paying shareholder dividends. Are Google paying shareholder dividends?
      ldo17
  • I'm sure the other tech companies

    are gagging to see what Apple announces next, so they'll have something to copy. :)
    Random_Error
  • apple the new sony

    Apple is great at attracting those who all about "cool".
    A newer version of sony, brand focused folks will be loyal, regardless of value proposition.
    captainhurt@...
  • Facts

    I get bombarded with negative comments about how this is the end of Apple. Yet the facts keep coming in on their record sales and record earnings. I never see any facts that support the claims that people hate Apple products. I guess the 48 million iPhone purchases last quarter were from people that hate their products. They say that Apple should make more products like Samsung who has 20 times more products than Apple yet don’t make half the profits of Apple. They say Apple can’t innovate yet I don’t see any new product out there that doesn’t resemble the iPhone to one degree or another. It’s OK to bash Apple but show us your intelligence by presenting facts to support your claims. Better yet, just hock your house and short Apple with no facts and just your dumb oss opinions and see how far that takes you. Yes you can get luck and make money but one think I do know is that you can’t do that more than a few times before you are selling apples on the street corner.
    fjl@...
  • Tim Cook Is Like Bashar Al-Assad

    Surrounded by servile sycophants telling him everything is all right, while in fact they are falling apart further afield.
    ldo17