This is Tim: Cook at the 2013 Goldman Sachs conference
On cash balances
Apple doesn’t have a Depression-era mentality. Apple makes bold and ambitious bets on products, and we’re conservative financially. But if you really look at what we’ve done in terms of investments…Last year we invested $10 billion in CapEx, we think we’re going to do a similar amount this year. We’re investing in retail stores and distribution around the world. Most importantly we’re investing in product innovation, in R&D, in new products; we’re investing in the supply chain. We’re acquiring some companies. And so I think it’s hard—or at least my definition of Depression-era mentality wouldn’t include a company that’s investing this much over two years. And when you add that to the fact that we announced just over a year ago that we’re returning $45 billion to shareholders through a combination of dividends and stock buyback, and we’ve already completed $10 billion of that, I don’t know how a company with a Depression-era mindset would’ve done all of those things.
And so now, we do have some cash, but it’s a privilege to be in this position. You know, last quarter alone, the cash flow from operations from Apple was over $23 billion. And so it’s an incredible privilege for us to be in a position that we can seriously consider returning additional cash toward shareholders. The management team and the board are in very active discussions, and we will do so deliberately and thoughtfully, we’ll evaluate a series of alternatives. I think that’s what our shareholders want and that’s what we’re going to do.
On the Greenlight proposal
Well, I think it’s creative, and we are going to thoroughly evaluate their current proposal. We welcome all ideas from all of our shareholders, including Greenlight, and we’re going to thoroughly consider it.
On the proxy lawsuit
I don’t think this is well-understood. The disagreement centers around a proposal on Apple’s proxy, which we filed our preliminary proxy back in December. It’s called Prop 2, and what this proposal is about, it’s about the rights of shareholders. Specifically, I want to be very clear on this: It’s not about whether Apple returns additional cash to shareholders, it’s not about how much cash to return to shareholders, it’s not about the mechanism to return it, it’s not about any of those things. It’s about the rights of shareholders.
Some time ago, early in 2012, we were looking at what things we could do to improve our governance further. And as a part of that review, one of the items that came out of that was that we thought we should eliminate a “blank check preferred” [clause] from Apple’s charter. And what that means is not that Apple could not release common shares, or release preferred shares, it just says that if Apple decided to do it, we’d need to go to our common shareholders to get their approval.
And so frankly, I find it bizarre that we would find ourselves being sued for doing something that’s good for shareholders. But this is the position that we’re in. I think it’s a silly sideshow, honestly. My preference would be that everyone on both sides of the issue would take the money they’re spending on this and donate it to a worthy cause. I think that would be a lot better use of funds. But what we’re going to do—you’re not going to see us do a campaign mailing. We’re not doing it. You’re not going to see a “Yes on 2” sign in my front yard.
This is a waste of shareholder money, and it’s a distraction, it’s not a seminal issue for Apple. And that said, I support it, Prop 2, I’m personally going to vote for it. I believe it’s the right thing for shareholders to have the right on this particular topic, I encourage others to vote for it, but it’s not something we’re going to spend cycles on. The serious issue at hand is the return of cash—how to do it, how much to do—it’s that and we’re very serious about that. But this Prop 2 thing is a silly sideshow.
If you look at the last three years, we’ve averaged about an acquisition every other month. The kind of companies that we’ve purchased have been companies where they have really smart people and/or IP [intellectual property]. Generally speaking, we’ve in many cases taken something that they’re working on and moved the skills to work on something else. Great example: We bought a company called PA Semi back two years ago, and we were in the process of building our capability to make the engines—to design the engines that are in today’s, all of today’s iPhones and iPads and iPod touches. And so this was an incredibly skilled group of guys and they could supplement an incredible group of folks that were already in Apple. They were working on PowerPC at the time, and so we didn’t have an interest in that, so we moved skills to work on our iPhone and iPad and iOS device engines.
That’s a great example of what we’ve done. And we’ve done many many others that are similar in nature to that. We will do more of those, and we’re constantly looking in the market for things to do. We really like to control the primary technology behind the products that we’re in, and so we’re constantly looking at that.