Apple CEO fires back at criticism, lawsuit
San Francisco • Apple CEO Tim Cook on Tuesday dismissed complaints from an activist shareholder that the company has a "Depression-era" attitude about hoarding cash, called a pending lawsuit over creating a special class of stock "a silly sideshow" and said his engineers have not lost their innovative edge.
Speaking at a Goldman Sachs technology conference, Cook reiterated Apple's stand that it is giving serious consideration to finding ways to hand out more cash to shareholders from a stockpile that grew to $137 billion as of the end of the December quarter, roughly two-thirds of which is held overseas.
"Apple doesn't have a Depression-era mentality," he said. "Apple makes bold and ambitious bets on products, and we are conservative financially."
Cook called the lawsuit filed by Daniel Einhorn's hedge fund, Greenlight Capital, a "misunderstanding" and said if Apple were ever to issue preferred stock which Einhorn is calling for the company would first seek shareholder approval. Last year, the company announced its first quarterly dividend since 1995, $2.65 a share beginning in August, as shareholders called on Apple to reward investors with a slice of its cash.
Greenlight Capital's suit seeks to halt a company-sponsored proposal that would eliminate "blank check" preferred stock; the proposal is scheduled to be voted on during Apple's annual shareholder meeting Feb. 27.
The company spent $10 billion on capital expenditures last year and probably will do the same this year, Cook said. Apple will not buy large companies simply to increase revenue, he added.
Apple's stock price, which has plunged 35 percent in recent months amid increasing competition from Samsung and Google in the smartphone and tablet markets, took another hit Tuesday as investors appeared to be listening for something more substantive out of Cook. Apple's stock fell $12.03, or 2.5 percent, to $467.90 in trading after his morning speech.
Cook noted that the current smartphone market of 700 million units sold every year globally, which Apple kick-started with the introduction of the iPhone in 2007, is expected to double to an annual market of 1.4 billion in four years.
"I see a market that is incredible to be in, maybe the best market of all times," he said. "Apple has enormous momentum."
Speaking with Goldman Sachs' chief Apple analyst, Bill Shope, Cook would not address speculation that the company plans to roll out a low-end iPhone. Instead, he pointed to the company's iPod line of music players. The first one sold for $399. Now the company offers a range of iPods, with a low-end device starting at $49.
Cook said the consumer tablet market, which Apple also created, is in its infancy. He said the company sold 23 million iPads last quarter, even as it had a tough time meeting the demand for its new iPad mini. During the same period, Cook said, Hewlett-Packard sold 15 million PCs.
In a note to investors, Piper Jaffray analyst Gene Munster said, "We have greater confidence that there will be a slight increase to the dividend when Apple reports the March quarter."
He also said Cook's talk reaffirmed his belief Apple will launch a cheaper iPhone in the fall.
The Associated Press contributed to this story
Amount of cash, securities held by Apple each year
2005: $8.3 billion
2006: $10.1 billion
2007: $15.4 billion
2008: $24.5 billion
2009: $34.0 billion
2010: $51.0 billion
2011: $81.8 billion.
2012: $121.3 billion
Source: Apple annual reports
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