.In a televised interview conducted today on CNBC
, Apple CEO Tim Cook told former hedge fund manager Jim Cramer that the long-term outlook for the company has never been better. This comes after Cook's announcement last week that Apple was lowering its revenue guidance for the fiscal first quarter
due to lower than expected iPhone upgrades in China. That announcement sent shock waves through the market with Apple's stock dropping nearly 10% the next day.
During his interview, Cook pointed out that he isn't worried about the 35% decline in Apple's shares since its peak last year. He says Apple is managed for the long term and cites three reasons why he believes that the long term outlook for Apple is better than it has ever been. Reason one is the company's innovative culture. Cook says his team is outstanding when it comes to getting hardware, software and services to work together. Reason two, the large active installed base of iPhone users which is now roughly 1.4 billion after adding another 100 million active iPhone users in 2018. Third, the iPhone has the highest rate of customer satisfaction and loyalty in the industry.
As the CEO points out, with this large, loyal installed base, Apple can expect recurring revenue from hardware sales and from the App Store. It also will help Apple continue to grow Services revenue, which has expanded from $7 billion in 2010 to $41 billion in calendar year 2018. Fiscal first quarter Services revenue is expected to be a company record $10.8 billion.
Sitting inside the Apple Store on Apple's campus in Cupertino, Cook told Cramer about how Apple's products are life changing. He mentioned the emails from Apple Watch
owners whose lives were saved by the timepiece, and the photos that are saved on the iPhone that bring back memories. The executive managed to sidestep Cramer's question about Chinese businesses that are subsidizing employees purchases of phones from Chinese manufacturers
while imposing fines on those who buy an iPhone. Instead, Cook spoke about how the decline in the country's economy was exacerbated by tensions from the trade war with the U.S. He is optimistic that the battle will lead to a new trade agreement between the two countries.
Cook called "baloney"on analysts who have turned bearish on the stock and those who have called the iPhone XR
a flop. He pointed out that since Apple started shipping the iPhone XR
on October 26th, it has been the most popular model every day. "Of course I'd like to sell more, and we're working on that," said Apple's CEO.
"In terms of the naysayer, I've heard this over and over again. I've heard it in 2001, I've heard it in 2005, in '7, in '8, in '10, in '12 and '13. You can probably find the same quotes from the same people over and over again."
Cook says that the market is emotional in the short term and that Apple looks through all of that, focusing on the long term. "And so when I look at the long-term health of the company, it has never been better," Cook stated. "The product pipeline has never been better. The ecosystem has never been stronger. The services are on a tear." He also discusses how Qualcomm is overcharging for its standards essential patents by charging "exorbitant" rates for licensing its patents instead of the Fair, Reasonable and Non-Discriminatory (FRAND) rates it should be charging.
In response to Cramer's comment about Alexa, Apple's CEO says that the company is investing heavily in the virtual personal assistant, which is now found on 500 million devices. Cook says that Siri is used 10 billion times a month and is available in 21 different languages in over 30 countries.
It's a fascinating interview and you can watch it by clicking on the video at the top of this article.