UBS analyst pisses off Apple CEO Tim Cook

“Tim Cook, Apple’s CEO, normally goes through the quarterly earnings call without skipping a beat. Nearly every time he speaks, Cook reminds everyone ‘This is Tim’ and then gives a polished answer to whatever question he’s answering,” Mark Rogowsky writes for Forbes. “Yesterday, though, something different happened and it wasn’t just the dropping of the self introduction. Apple had just delivered a quarter that narrowly exceeded expectations — even though the company reported its first annual revenue decline since 2001.”

“Cook reeled off some highlights: Apple saw a record number of switchers from Android to iPhone, the company’s services business grew 24% to $6.3 billion, Apple Music has industry leading customer satisfaction in streaming. Then, as always, the question-and-answer segment followed and one moment seemed to set Cook off,” Rogowsky writes. “Steve Milunovich, currently at UBS but a Wall Street analyst for decades, asked: “The question is … does Apple today have a grand strategy for what you want to do? I know you won’t tell us what it us, but do you know what you want to do over the next three to maybe five years?””

“Cook replied more politely than many might have. ‘We have the strongest pipeline that we’ve ever had and we’re really confident about the things in it. But as usual, we’re not going to talk about what’s ahead,’ he said,” Rogowsky writes. “Milunovich tried to follow up and Cook essentially blew him off with a one-sentence reply. I can’t be in Cook’s head. But given that Apple is typically working 2-3 generations ahead on iPhone, Apple Watch, et al. and has been upping R&D spending by billions of dollars, it’s likely he was churning through less generous replies. The idea that Apple doesn’t have a 3-5 year plan is so beyond absurd it is a bit odd that a veteran analyst would pose that question. That the very asking implies Apple is rudderless suggests a captain lost at sea.”

Read more in the full article here.

MacDailyNews Take: It was a foolish, impertinent question. We don’t know if Milunovich meant it the way it came across, but the fact that he asked it twice suggests either tone-deafness or intended disrespect.

On our very best behavior, we’d have answered: “No, Steven, the CEO of the world’s most valuable company has no plan. Next question.” Likely, our reply would be much worse. Milunovich wouldn’t be thanking us for the additional color, that’s for sure.

Cook showed remarkable restraint. Steve Jobs would have absolutely eviscerated Milunovich. There’d have been no recalcitrant followup question. Of course, Milunovich would have never had the temerity to pose such an insolent question to Jobs.

Here’s the full exchange, verbatim:

Steven M. Milunovich – UBS Securities: Tim, some investors are antsy that Apple has not acquired new profit pools or introduced a financially material new product in recent years. The question is, A, does Apple today have a grand strategy for what you want to do? I know you won’t tell us what it us, but do you know what you want to do over the next three to maybe five years? Or is it more a read the market and quickly react? And B, do you have any sense that we’re kind of in a gap period where the technology and arguably what we’d call the next job to be done haven’t yet aligned? And so maybe in a couple years, we will see this flurry of new products and it’ll sort of match what people want to do, but it’s not quite here yet?

Tim Cook: We have the strongest pipeline that we’ve ever had and we’re really confident about the things in it. But as usual, we’re not going to talk about what’s ahead.

Milunovich: But in terms of your approach I guess to new products, do you have a strong sense of where technology is going and where you’re going to play? Or is it still enough up the year that you are willing to react fairly quickly, which arguably your organization allows you to do for the size of company you are?

Cook: We have a strong sense of where things go and we’re very agile to shift as we need to.

Milunovich: Okay. Thank you.

MacDailyNews presents live notes from Apple’s Q416 conference call – October 25, 2016


      1. What Elan doesn’t talk about is a judge laughing at his request last summer (a few weeks before the mysterious “drone attack explosion” of his dragon rocket) to sit at the “big boy” table with Lockheed Martin (for lucrative USAF payload delivery contracts to Earth orbit). His cars kill early adopters. He is smoking “hyper loop” a new weed available in Colorado.

    1. Where do you think products come from? They are the result of years of work. It was a stupid question. Apple’s products aren’t whipped up to respond to market impulse. It’s a ridiculous notion. Of course they plan things in advance.

  1. The reason that the question was asked was that:
    1. Apple’s revenue’s are down YOY
    2. Significant parts of the product line haven’t seen updates in years.
    The thing with Apple is that they do not generally make me too products. They typically do not add on features just because they are available. They rarely pre-announced unless it is important to do so.
    They will often release features later than other manufacturers because they think about how they are going to be used and build them exceptionally well. For the short-term minded analyst, this is frustrating.
    I suggest we wait one day to find what new things are coming to the Mac.

    1. Any competent analyst might be able to work out that Apple’s YoY decline might be something to do with comparing this year’s pretty decent sales with the enormous spike in sales after Apple started selling large screen iPhones.

      That YoY comparison will no longer be a factor and Apple guided for a return to growth next quarter.

      1. Agreed, alanaudio. Real analysts and investors value revenue and profit trends more than simple YoY comparisons. There are too many factors involved in YoY comparisons – worldwide economic performance, currency exchange rates, product refresh cycles, etc., to put too much emphasis on such a simplistic comparison. But that’s what many are doing. So we end up hearing about Apple being in “decline” and needing to “diversify” more that it already has been doing.

    2. The question was asked because they have strongly hinted at reinventing TV for years, the entire Mac line has gone to rust (notice the sales numbers) the IPad Pro did not have the same specs as force touch as the MacBook at the time. Apple makes no Apps for the Apple Pencil. Cannot be used in iWork. No update on WiFi options. Apple was 5 years ahead of everyone with personal AI and they are now behind. No mention of innovation on the call. No subscription movie content service and now google is launching TV service. R@D spending way up with nothing to show. The latest Apple TV does not support 4K? Apple is clearly showing. Follower strategy. IWork now offers collaboration. 6 years late. Remember the Apple was pulled into to larger phone screens with the 6. 2 years late. Missteps.

  2. I’ve never been impressed by analysts, but even by the low standards that I apply to analysts, Milunovich was behaving like an idiot.

    You can’t possibly have followed Apple for any length of time and imagined that Apple does not have a long-term plan. Success like Apple’s doesn’t happen by chance. You can easily see how one product follows on from it’s predecessors and how new concepts get incorporated into future products. Any product that Apple is intending to launch in 2017 is likely to have been mostly designed last year or the year before that. To make anything in the sort of quantities that Apple does, you need to plan well ahead and ensure that components, manufacturing facilities and assembly techniques will all be in place when needed and working reliably.

    I’m happy to acknowledge that Apple’s plan for the future might not agree with everybody else’s, but you’d have to be pretty thick to believe that Tim Cook and Apple do not have a plan for the next three to five years.

    1. As much as I think that analysts are nearly worthless, they are not completely worthless. As none of us ever gets a chance to talk to comply management ourselves, they do provide a function. Given the criticism on MDN about the sad state of product updates for multiple product Apple product lines, he actually had valid questions.

      As far as your statement “You can’t possibly have followed Apple for any length of time and imagined that Apple does not have a long-term plan”, the standard wall street boiler plate still applies: past performance does not guarantee future returns. Just because Apple always operated with a plan in the past, and were able to execute them, doesn’t mean we should assume they will do so in the future. Without any guidance or compelling announcements from the company, the analysts are right to ask questions.

      I really like Tim Cook, but the repeated statements about the full product pipeline are beginning to ring a bit hollow. At some point it becomes a matter of put up or shut up.

      1. 1. Ask a silly question, get a silly answer. This is why TC Gives this pat response. What is TC gonna say: “Well, Steve, I’m glad u asked that question: we are working on a new OS to rule them all, we are designing a flying car, and also a personal rocket ship.”??? Back in the day, did Apple tell analysts anything about its future plans?, like it working on OS X, or re-writing code to run on Intel chips? The answer is: no. So why should Apple do so now?

        2. SM knew the answer to his question before he asked it. So what was his point?

        3. The question was disrespectful. Basically: do u know what u r doing, or is Apple just blowing in the proverbial wind?

        It was very unprofessional of SM.

    2. Yeah? What’s the long term plan allowing Macs to decay to the point of being ridiculous?

      Explain to us what Apple’s plan is for the Mac Mini. Or the Mac Pro.

      I’ll hang up and wait for an answer.

  3. Again, no fancy talking or theorizing is going to disguise the hard truth of a year to year lowering of profits. That is life and Mr. Cook will have to deal with that. The 24% percent increase in services is just an internal shuffling of where the money came from. The big picture is still 9% down. My father owns a small business and he loses sleep when the year to year drops. Apple is not immune to this being a problem. The future plans is a valid question because there are few product lines that are looking really behind the times. Mr. Cook needs to decide what business areas Apple will be in and do a kick ass job in participating in them. Even if it means dropping Macs. Better not to be in a business area than to offer lackluster products.

  4. Just when there was a tiny bit of hope arising, investors this morning are most definitely not buying the response Tim gave to a very good question. Tweaking stuff isn’t the same as innovation. If we don’t see more than that tomorrow, the hapless CEO will have looked foolish in his response – just like he looks all the time.

  5. “Well Steven, even as we speak I’m testing a pair of earbuds that are designed to filter out stupid. As soon as we’re done here I’m sending them back to the lab for adjustment. We think our customers are going to love them.”

  6. Dear MDN, under Steve Jobs, such a question would never even have been raised. It’s precisely because it’s Tim Cook at the helm that Apple appears to be more and more rudderless and what makes the question relevant.

  7. Don’t like the guy but I, too, think he asked some fair questions. Of course, even if Cook had some grand plans he shouldn’t have divulged them unless they were ready to be unveiled. So fair questions, but not smart to ask them on an earnings call IMHO.

  8. Hindsight: Cook should have said something like this:
    Unlike Samsung and Google, we KNOW what we will be doing in 3 to 5 years, but we are not going to tell them or you. They will just have to wait to learn what they will be doing after we release our products!

  9. Wall Street gamblers want to make a bet, but TC isn’t biting. Apple has its business to concentrate on, not investors worries or desires. Also, that is the beginning of a “gotcha” type game, where if TC were to make a statement about the future (crystal balls don’t work, btw), it could come to bite him later on whether or not it is within his control, like a recession based on the policies of a sefl-centered business man becoming president. 😉

  10. Let’s be honest though, how many ‘we have the best pipeline ever …’ Comments can we take continually year after year of late, when many of the products are struggling to be updated of late, let alone transformed in done way, beaten to market by the echo which was almost exactly what ‘experts’ said Apple was to launch many months earlier, it took for ever to see and accept the rise of music streaming and the new AppleTV after years supposedly in development some what under delivers (especially in definition), upon expectations, to a background of failing content negotiations. Competition is getting to strong from various directions for this perception of apparent lack of focus to continue much longer surely.

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