Apple CEO Tim Cook is taking his show on the road — mostly to defend Apple against the ever louder chorus of naysayers that have emerged since Apple dropped a dismal earnings report last week.
“I think that is a huge overreaction. Look, we just had actually an incredible quarter by absolute standards,” Cook said during an appearance on Jim Cramer’s “Mad Money.” “What we’re seeing is that people are upgrading at a different rate, a lower rate, than they did last year but still higher than the year before … The satisfaction has never been higher, and the loyalty rates have never been higher.”
Cook’s enthusiasm follows an earnings report indicating that Apple sales were down last quarter and that Apple’s revenue will continue to be down (by 13 to 17 percent) next quarter. It also follows the sudden announcement by Carl Icahn that, despite his former Apple bullishness, he would be liquidating his entire position in Apple.
Despite the tough sledding, Cook says Apple still has many good days ahead of it, particularly for its flagship product, the iPhone.
“Penetration today is in the 40s … Emerging markets, like India LTE penetration, is zero. We’ve got great innovation in the pipeline, new iPhones that will incent you and other people that have iPhones today to upgrade to new iPhones,” Cook told Cramer, before noting that Apple’s China headwinds are also a temporary feature.
“The iPhone upgrade rate affects all countries, including China. The great thing is: The [Android] switcher rate in China is huge. Forty percent up over the first half of last year, the first half of this year … Economy, clearly not as strong as it was a year ago. Softening. Currency weakening … Five years ago, there were about 50 million people in the Chinese middle class. Five years from now, that number’s going to be almost 500 million … I could not be more optimistic about China.”
Cook had a similarly bright attitude about India.
“India will be the most populous country in the world in 2022. India today has about 50 percent of their population at 25 years of age or younger … And, this year, the first year, LTE begins to roll out … The carriers don’t sell phones in India. So, there’s a lot of work to do. But, last quarter, we grew 56 percent in India on iPhone units.”
And, looking ahead, Cook also noted great enthusiasm for the Apple Watch.
“If you look at iPod, iPod wasn’t viewed as a success [when it first launched], but today, it’s viewed as an overnight success … I think that, 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 for you. And then, it will, all of a sudden, be an overnight success.”