John Sculley: Tim Cook got Wall St. to love Apple (video)

From an interview Friday on CNBC:

Steve Jobs created a loyalty with users that is unparalleled in the  world, certainly for any consumer product. What Tim Cook has done, he’s built a loyalty with shareholders.

He’s done it by taking advantage of the high prices Apple can charge for its products—which it’s earned because of its brand recognition and product reputation—and he’s been able to build a business model that’s very attractive to hold onto shareholders.

He’s buying back stocks—about $100 billion of stock this year. He has a huge reservoir of additional capital beyond that. He gives out dividends.

And so he doesn’t have to be on the bleeding edge of innovation. Remember, he’s valued as a value stock, not as a growth stock, so he’s really positioned the company well, saying that he doesn’t have to make a bet on “does Apple go out and buy Tesla?” or things like that. He can just track and scale, and watch what things are going to be important and adapt to them.

Cue the video:

Former Apple CEO on Apple’s rise to $1 trillion from CNBC.

My take: When Apple hits a big milestone, a sit-down with the ex-CEO is a no brainer. This was a smart one. BTW, Scully doesn’t expect the next big “Moore’s-law cycle events” for another 5 to 7 years.

9 Comments

  1. Fred Stein said:

    Thank you Joseph. Well said.

    1
    August 4, 2018
  2. Fred Stein said:

    Actually Sculley doesn’t quite get it. He doesn’t quite understand how effectively Tim has managed innovation.

    Apple continues to innovate. Much of their innovation is deep technology. And that is one of the biggest reasons they main good margins at competitive prices (not “high prices”) as Sculley claims. Apple’s tech investments and innovations allow Apple to keep their prices competitive. I’ve said this many times – once you account for on-gong software updates, the various free support options, and higher resale value, most Apple products are less expensive. And second hand iPhones must be counted for the sub-$350 segment. It’s a real business.

    Another Tim Cook innovation, Apple Watch, dominates its category and is becoming a platform. It may become “the” platform in Smart Watches because the Smart Watch market is far more fragmented than Android. Despite iPhone’s lower market share they dominate the App Store revenue, which arguably makes them the best SmartPhone platform.

    7
    August 4, 2018
  3. Whatever you think about Sculley’s term as CEO at Apple, I think he fully understands the Apple of today, and how Apple has evolved under Cook’s leadership.

    Did Scully address Apple’s “deep technology” achievements in that time compressed interview. No, but that doesn’t mean he doesn’t understand.

    0
    August 4, 2018
    • David Emery said:

      > I think he fully understands the Apple of today

      Better late than never, I guess.

      2
      August 4, 2018
    • Fred Stein said:

      You raise an excellent point. Scully wisely did not get down in the weeds.

      But he did say high prices were due to brand, which is only part of the story.

      Not sure what Sculley means by ‘bleeding edge innovation”. No company on earth does what Apple does in highly innovative new chips design every year while pushing the state of art in silicon manufacturing and then scales up manufacturing, again, like no other company in any field with such reliability that no one ever discusses Apple’s warranty expense because it’s variances are on the order of FX vagaries. Ugh – that was a mouthful. Short version: Millions of person years of innovation make iPhone the best.

      0
      August 4, 2018
  4. “No company on earth does what Apple does in highly innovative new chips design every year while pushing the state of art in silicon manufacturing and then scales up manufacturing, ”

    (with a bit of humor in my voice) I think you could the above “bleeding edge innovation”.

    0
    August 4, 2018

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