CRAMER: Well, then you were surprised with the market reaction to both when you decided to not reveal units and when you revealed the shortfall.
COOK: I’m never surprised by the market, to be honest with you. Because I think the market is quite emotional in the short term. And we sorta look through all of that. We think about the long term. And so when I look at the long-term health of the company, it has never been better.
The product pipeline has never been better. The ecosystem has never been stronger. The services are on a tear. If you look at, let’s just take wearables as an example, right? Wearables, it’s mainly the Apple Watch and AirPods.
If you look at this, and on a trailing basis. I’m not projecting. On a trailing basis, they’ve we’ve already exceeded the revenue for wearables is already more than 50 percent more than iPod was at its peak. Now, this is a product that I think everybody would say it was an incredibly important product for Apple, full of innovation, and probably, the trigger for the company getting on a very different trajectory and into other markets.
And so already, exceeded it by 50 percent at its peak. At its peak. Also, if you take AirPods and the Watch separately, and you sort of back these up and align it to the launch date of iPod, as well, and, you know, where all of them have a comparable amount of time, you would find that each one, independently, is, like, four to six times ahead of where iPod was at a comparable period of time.
And so AirPods are becoming ubiquitous out there. People love them. I get notes every day. They’re chock full of tech. But they just work. It’s the elegance of them, but with significant technology and built right in and an unbelievable user interface.
[Break]
CRAMER: I’ve been following stocks for 40 years, Tim. And you guys are a fountain of innovation. My wife said, “Tell him, what do they want? Time travel?” (LAUGHTER) What do you have to do?
COOK: Hey, time travel sounds kinda cool.
CRAMER: Right? The reason I mention it is because there are companies that sell at 22 to 23 times earnings, they are the consumer packaged goods companies. There are companies that tend to go from 1 to 4 percent. If they get 5%, then they get a 28 multiple.
And yet, the analysts who follow your company continue to look for units of phones, they’re not thinking about the revenue. And yet, if it were Procter & Gamble, and they got that many razor blades, they’d pay 28 times earnings. Are you followed by the wrong people?
COOK: I think that our story isn’t well understood. I think Apple is not well understood in some of Wall Street. For example, I think there are several people that believe the most important metric is how many iPhones are sold in a given 90-day period or what the revenues is.
This is far, far, far down my list. The point is, if somebody decides to buy an iPhone a little later, because of the battery, huge discount that we gave, they decide to hold on a little longer, I’m I’m great with that.
I want the customer to be happy. We work for them. And so the important thing is that they’re happy. Because if they’re happy, they will eventually replace that product with another. And the services and the ecosystem around that will thrive.
CRAMER: But as long as it’s north of 60 percent, I mean, as long as cell phones are north — I don’t know how you get people to think, even if it’s $20 billion in service revenue. It’s the 62 percent. It is overwhelming. And they don’t know what to do. And I understand their conundrum, Tim. They don’t know what to do. Because the cell phone’s such a big part of the pot.
COOK: Yeah, but if you really back up and look at Apple — in our last fiscal year, we had $100 billion of revenue that was not iPhone, $100 billion. And in this last quarter, if you take everything outside of iPhone, it grew at 19 percent. Nineteen percent on a huge business.
CRAMER: That’s — again, it’s a consumer packaged goods company but not a tech. Why not accept it and say, “You know what? We’re just — we wanna be covered by other people”?
COOK: (LAUGH) I don’t think we get to pick who we’re covered by —
CRAMER: Well, I don’t know. You’re a big company. Maybe you could. Now, I’ve got some ideas for you, okay? I talked to some people at Walmart yesterday. An arrangement with Walmart, Flipkart to take over India with a budget phone, rather than doing it piecemeal.
COOK: Yeah. For us, we’re about making the best product that enriches people’s lives. And so we’re not about making the cheapest, right? We want to make a great value. But that’s not necessarily the cheapest. And so for us, what we’ve seen is there’s enough people in every country in the world that we play in that we can have a really good business by selling the best phones.
Now, the best phones, we knew that, as we went to the X and then the follow-on of the XS and the XS Max, that everybody would not want to spend $1,000 for the phone. So we made the iPhone XR. And we put as many of the advanced technologies as we could in that phone–
CRAMER: Well, let Flipkart do the subsidy.
COOK: And we priced it right between the 8 and the 8 Plus of the year before. But in India, in general, we are all in. It is a major focus. If you look at how we’ve done, over the years, we’ve gone from a $100, $200 million business to, last year, we exceeded $2 billion.
That $2 billion was flat, year over year, after rapid, rapid growth. And so we have more work to do. We’d like to put stores there. We would like some of the duties and so forth that are put on the products to go away. And we’re working closely with the team there. And I believe that we’ll have better results at some point in the future. I’m not in the forecasting mode here today. But it’s an important market for us.
CRAMER: You have people who are naysayers. One of the naysayers is not an analyst. It’s Qualcomm. Qualcomm keeps telling you, over and over again, “You’re gonna come to the table. You have to. Lost the suit in Germany. Lost the suit in China. Wait ’til you see them cave.” Are you gonna cave?
COOK: No. Look, the truth is, we haven’t been in any settlement discussions with them since the third calendar quarter of last year. That is the truth. So I’m not sure where that thinking is coming from. The issues that we have with Qualcomm is that they have a policy of no license, no chips. This is, in our view, illegal. And so many regulators in many different countries agree with this. And then secondly, the obligation to offer their patent portfolio on a fair, reasonable, and nondiscriminatory basis. And they don’t do that. They charge exorbitant prices. And they have a lot of different tactics they use to do that. And that’s not just us saying that. I mean, you can see what’s coming out of the FTC trial here in the United States. And obviously, I have an issue with some of their other tactics that I’m sure you’ve read about.
CRAMER: Right, that they say you are in settlement talks all the time.
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