Tim Cook Talks Apple
Tim Cook has always shied away from the limelight. That's not so easy, though, when you're the CEO of the largest tech company on the planet. Cook has sat down with both NBC (airing tonight) and Bloomberg BusinessWeekfor a pair of interviews to talk Apple . Let's see what interesting tidbits Cook gave up for investors.
On bringing jobs back home
The Mac maker launched its newest redesigned iMac at the end of November, and buyers subsequently noticed something interesting etched into their new desktops: "Assembled in USA." That was accompanied by the typical "Designed by Apple in California," but was a stark contrast to the customary "Assembled in China" label.
With all the talk of job creation amid macro uncertainties lately, a lot of public attention has turned to Apple's outsourced manufacturing and related supply chain controversies. It's a little odd that Apple slipped the move under the radar, especially considering how politically popular of a headline it is. Cook has confirmed in both interviews that Apple is bringing some Mac assembly back stateside. The company is investing over $100 million to make it happen.
Cook was also quick to point out that several critical ingredients to iDevices are already produced domestically, and then shipped overseas for final assembly. For example, the A-series of processors are built by Samsung in its Austin, Texas, facilities, and Corning's Gorilla Glass that's found on the front of iDevices is also built in Kentucky. Apple is largely responsible for sparking interest in Gorilla Glass with the original iPhone, and it is set to become a billion-dollar business this year for the glassmaker.
This approach also differs from that of Cook's predecessor. When asked about bringing manufacturing jobs back home, Steve Jobs had previously told President Barack Obama point-blank, "Those jobs aren't coming back." It's not just a matter of cost (BusinessWeek estimates the average Foxconn salary at $2.50 per hour), but also a matter of labor supply with the right skill sets.
Starting next year, some Mac production will be brought home. It's likely that Apple will face higher costs as a result, but the number of Macs made domestically will probably be a small minority, so the impact on overall costs may be negligible. Macs are now 15% of the business, so a slightly increased cost structure on a fraction of units here shouldn't be material.
As Apple continues to duke it out with Samsung competitively and legally, Cook said it's important to distinguish the South Korean conglomerate's many operating divisions:
We can separate in our minds the different portions of their company. They're a big company and have different divisions and so forth. So that's kind of how I try to think about it.
It's not the first time Apple's maintained frenemyships, either. Microsoft has been a primary rival for decades, yet provides its popular Office suite on the Mac platform. Microsoft is supposedly working on an iOS version of Office. too. In fact, Apple probably wouldn't even be here today if Bill Gates hadn't bailed out the company in the late '90s with a $150 million investment.
Intel is a critical supplier for Mac processors, but Chipzilla is now trying to crack into mobile. Intel is also pushing its Ultrabook designs that compete with MacBook Airs and iPads, yet there's long been speculation that Intel could be considering a foundry relationship with Apple. Apple has played a large part in pushing Intel to improve integrated graphics performance, and the two also collaborated on creating the new Thunderbolt I/O standard.
Apple has plenty of frenemies, but Samsung is a little different because it was so blatant about ripping off Apple designs. Cook said that he felt there was no other choice but to pursue litigation, despite his hatred of it.
On being CEO
Cook recalls how Jobs noted that Apple had never had a "professional transition at the CEO level." In Jobs' absence, CEOs were fired one after another without an orderly transition. Among all the great things that Apple had accomplished up until then, a smooth handoff wasn't one of them. Jobs recommended Cook as CEO to the board, and asked Cook never to ask what he would have done.
Jobs remembered how Walt Disney was "paralyzed" shortly after its namesake founder passed away. Managers would have meetings just to discuss "what Walt would have done." Fortunately for Disney, it now has a very capable CEO who even sits on Apple's board. Instead, he insisted that Cook just do what's best for Apple. This isn't a new anecdote, as it's been told before, but Cook said that "removed a tremendous burden" from him that allows him to focus on the future.
When Jobs resigned last August, shares didn't even flinch the following day. Investors weren't too shocked considering his deteriorating health. At their all-time peak of $705.07 after his death, shares had gained an incredible 87% from the $376.18 they closed at on Jobs' last day as CEO. Not a bad transition for investors, if you ask me.
More where that came from
These are just a couple of interesting tidbits from the lengthy interview. I'd encourage investors to peruse all 11 pages when they get a chance. Cook's making the rounds with these two sitdowns.
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The article Tim Cook Talks Apple originally appeared on Fool.com.Fool contributor Evan Niu, CFA, owns shares of Apple and Walt Disney. The Motley Fool owns shares of Apple, Walt Disney, Corning, Intel, and Microsoft. Motley Fool newsletter services recommend Apple, Walt Disney, Corning, Intel, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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