Apple CEO Tim Cook calls shareholder suit a ‘silly sideshow’
SAN FRANCISCO — Apple Inc. Chief Executive Tim Cook criticized a rebellious investor for creating a “silly sideshow” by filing a lawsuit a few weeks before the company’s annual shareholder conference.
“Frankly, I find it bizarre that we find ourselves being sued for doing something that’s good for shareholders,” Cook said. “It’s a silly sideshow, honestly. My preference would be that everyone take the money they are spending on this and donate it to a worthy cause.”
Cook made his remarks during an interview at a Goldman Sachs technology conference Tuesday. The one-hour appearance covered a variety of subjects, including the shareholder dispute, whether Apple had lost its innovation mojo and the continued expansion of its stores.
If Cook was feeling the pressure of a falling stock price and investor anger, he didn’t show it. His remarks displayed an unusual amount of passion and even glibness for a man who carries a more buttoned-down reputation.
For instance, Cook talked about his larger view that Apple’s long-term advantage lies in its relentless focus on making “great products” that produced moments of “magic.” He said competitors would have a difficult time matching Apple’s combined strengths in software, hardware and services.
“Innovation is so deeply embedded in Apple’s culture, the boldness, the ambition, a belief that there are not limits, the desire among our people to not just make good products, but to make the very best products in the world,” Cook said. “It’s as strong as ever. It’s in the values and the DNA of the company. I feel fantastic about it. There’s not a better place for innovation.”
But Cook grew feisty when discussing the challenge issued by David Einhorn of Greenlight Capital Inc. Last week, Einhorn went public with his request that Apple issue a special class of stock to shareholders. Einhorn and other shareholders have been pressing Apple to do more with the $120 billion in cash on its balance sheet.
Einhorn also sued to block a proposition that Apple had placed on its annual proxy ballot that would require a shareholder vote before issuing such a stock.
At first, Cook seemed ready to extend an olive branch of sorts to Einhorn, saying his proposal for a special class of stock might have some merit.
“I think it’s creative,” he said. “We are going to thoroughly evaluate their current proposal. We welcome all ideas from all our shareholders.”
But from there, Cook fired back against some of the criticisms leveled by Einhorn, including his remarks that Apple has a “Depression-era mentality” because it’s hoarding cash.
Cook listed several areas in which Apple is investing money, including infrastructure, talent and new products, in addition to announcing last year that it would return $45 billion to shareholders in stock dividends.
“Apple doesn’t have a Depression-era mentality,” he said. “I don’t know how a company with a Depression mind-set would have done all of those things.”
Cook said the Cupertino, Calif., company is not going to launch a campaign to get the proposition passed, in part because he believes that its pro-shareholder nature should be self-evident to investors.
“You’re not going to see a ‘Yes on 2’ sign in my yard,” Cook said. “It’s a distraction. And it’s not a seminal issue for Apple.”
Apple plans to file its response to Einhorn’s lawsuit by the end of Wednesday. And a hearing on the matter is set for next week in District Court in New York.
The annual shareholder meeting is scheduled Feb. 27.
Cook repeated that Apple is continuing to consider whether and how it might return more cash to shareholders.
“It’s a privilege to be in a position where we can seriously consider returning additional cash to shareholders,” he said.
Cook also used the word “privilege” to describe the kind of issues facing Apple’s stores.
He reiterated how crucial the stores remain to Apple. And he discussed the company’s expansion plans for its stores by noting that they were becoming so popular that their capacity was being strained by the number of visitors.
“Some of our stores aren’t big enough,” he said. “It’s a privilege to have this kind of issue.”
Cook said Apple is shutting down 20 stores and moving them to locations where they can be expanded. In addition, the company will open 30 stores at new locations, mostly outside the U.S., including its first in Turkey. Apple will then have stores in 13 countries.
Last year Apple’s 400-plus stores attracted about 120 million people. Cook said the stores’ popularity reflected the different philosophy that went into creating them.
“It’s a retail experience where you walk in and you realize the store is not here for the purposes of selling; it’s here for the purpose of serving,” he said.
Apple spends about $1 billion annually on capital expenditures related to retail. Cook said the stores have been essential in terms of introducing people to new products. He said it’s hard to imagine Apple’s iPad tablet becoming as successful as it has without having a place where customers can see and touch something they had never experienced.
“There’s no better place to discover and play and learn about our products than in retail,” Cook said.
