I’m not the type to say, “This would never have happened when Steve Jobs was around,” but I can’t picture the late Apple CEO sitting down on CNBC’s Mad Money TV show to have a chat with Jim Cramer, a man famous for ranting, screaming, and ringing buzzers. But with Tim Cook at the helm, this is a different era for Apple, especially after seeing quarterly revenues drop year-over-year (“In Q2 2016, Apple Sees First Revenue Decline in 13 Years,” 26 April 2016). Thankfully, loud noises were set aside for what turned out to be a calm, intelligent, 24-minute interview about Apple’s finances and future.
The beginning of the segment attempts to soothe recent fears about Apple’s financial health. Cramer starts out by telling his audience, “A stock like Apple should be owned, not traded.” And Cook immediately downplays the “overreaction” to Apple’s Q2 2016, pointing out that Apple’s $10 billion profit in Q2 was more than any other company made.
Cook blamed Apple’s, and particularly the iPhone’s, revenue stumbles on three things: lower upgrade rates (which he said are still higher than in the past), an economy that isn’t as strong as it was a year ago, and weakened currency exchange rates. He also noted a lack of growth in the Chinese smartphone market.
But Cook sees a lot of bright spots as well. “The loyalty rates have never been higher, and that is what’s really important for us,” he said. Cook also mentioned upcoming iPhone innovations that will convince people to upgrade. “We’re going to give you things you can’t live without that you just don’t know you need today,” he said. “There are a lot of people who don’t have the pleasure of owning an iPhone yet,” he added, pointing to more potential for growth.
Cook also focused on the growing Services revenue category, and the booming Chinese middle class as possible areas of growth. Despite the Chinese government forcing the shutdown of the iBooks Store and iTunes Movies in China (see “iBooks Store and iTunes Movies Shut Down in China,” 25 April 2016), Cook is optimistic that they’ll soon be back online.
Regardless of a lot of talk to the contrary, Cook remains upbeat about the Apple Watch, saying, “I think in a few years, we will look back, and people will say, ‘How could I have ever thought about not wearing this watch, because it’s doing so much.’”
CNBC has now released the second and final part of the interview. It examines Cook’s softer side, focusing on how Apple products are helping people, Cook’s values, and who inspires Cook.
Even though Apple is still making money hand over fist, Wall Street reacted poorly to Apple’s ever-so-slight downturn. Music industry analyst Bob Lefsetz is now openly calling for Cook’s firing, but Daring Fireball’s John Gruber got it right when he said that this is “reactionary crazy talk.” Lefsetz has long been an Apple doomsday preacher, but he won’t be the last to call for Cook’s resignation. It’s still crazy talk.
We hear regularly from people critical of Apple’s direction in the post-Jobs era, and most of them have valid criticisms (though many of those criticisms would have been equally valid when leveled at the Steve Jobs-era Apple). But who is better suited to lead Apple than Tim Cook? Yes, he started as an operations guy, and he’s not Steve Jobs, but visionaries like Jobs come along only infrequently, and even Jobs required a long, painful metamorphosis before he became the man who captained one of the greatest comeback stories in business history.
In a field rife with incompetent and even fraudulent CEOs, Apple is lucky to have Cook, who has led the company to record revenues and profits as CEO for the past five years. Under his leadership, Apple has also increased its donations to charity, improved its efforts to use renewable energy, and faced down the U.S. government over protecting customer privacy. So no, one quarterly drop in revenues from the previous year does not a failure make, particularly when that drop was accompanied by $10 billion in profit.