Apple’s Tim Cook jabs back at investor concerns about China
Apple Inc. Chief Executive Tim Cook said Monday that slowing consumer spending in China hasn’t shaken his confidence in the company’s business prospects in the country.
Last week, the Cupertino, Calif., company announced sales in mainland China fell 11% in the first quarter compared with the same three-month period last year. The numbers from a year ago were hard to duplicate because sales of the new big-screen iPhone 6s at the time ran off the charts worldwide.
But the change in trajectory in China was among several disappointing results that spooked investors and sent Apple’s share price tumbling about 10% last week. China, Hong Kong and Taiwan add up to Apple’s second-largest business region after the Americas.
Cook attempted to reassure investors about the company’s course in China during an interview with CNBC’s Jim Cramer on Monday afternoon.
“I could not be more optimistic about China,” Cook told Cramer. “The long-term thesis is intact. There’s been nothing like it in the history of the world.”
Cook’s reasons included:
- The number of iPhone customers in China who had last used an Android smartphone rose 40% from September through March, compared with the same six months the year before.
- Though sales fell 11% in mainland China, the country’s weak currency had a lot to do with it. Sales dipped only 7% when accounting for fluctuations in the yuan.
- First-month sales of the iPhone SE, the lowest-priced iPhone ever, have “thrilled” Cook.
- Five years ago, there were 50 million people in China’s middle class. Five years from now, there will be 500 million, and many of them will want the iPhone, Cook said.
- Revenue from Greater China during Apple’s last fiscal year was $58 billion, more than any other foreign company, Cook said. Despite the short-term economic issues, Apple is well-positioned in China, he said.
- And should there be any lingering sluggishness in China, Apple now is “really putting energy into India,” which is just getting high-speed LTE cellphone coverage and has a huge, young population.
Cook also addressed China’s recent shutdown of Apple’s online shop for digital books and movies. Last week, billionaire investor Carl Icahn said he sold all of his Apple shares because he wasn’t comfortable with the risk of Chinese authorities causing havoc for the company at any moment.
Cook told Cramer that Apple was working with the government to get back online soon.