Apple CEO Tim Cook seems eager to dispel the notion that his company shortchanges the U.S. by making its products overseas — especially in China — and parks about 93% of its $256 billion in cash outside the country, where tax rates are lower.
“Apple is a company that could only have been created in America,” he told analysts in a quarterly conference call. “We’re incredibly proud to support more than 2 million jobs in all 50 states, and we expect to create even more.”
In the fiscal year that ended in September, “we spent more than $50 billion in the United States with American suppliers, developers and partners. And we continue to invest confidently in our future.”
Analysts were more interested in other subjects, especially the lower than expected iPhone sales in the quarter that ended in March.
“One of the things we did not get right was the mix between the iPhone 7 and the iPhone 7+,” Cook says. “The demand was much stronger for the 7+ than we had predicted. So it took a little while to adjust… What did we learn from it? Every time we go through a launch we learn something. And you can bet that we are brushing up our models and will apply everything we’ve learned to the next time.”
Cook also noted that there’s “a pause in purchases” for iPhones “which we believe are due to the earlier and more frequent reports about future iPhones.”
The CEO defended the Apple Watch, which some analysts consider a disappointment.
“We have seen the watch as a key category for us,” he says noting that unit sales more than doubled in six of its 10 biggest markets early this year. “We couldn’t be more satisfied with it.”
The company doesn’t break out a sales number for the watch, choosing instead to blend it with other products including AirPods. The earphones “are very much in the ramping mode and we’re not coming close to satisfying demand.”
Business for the two products, plus Beats and Apple TV, “was well into the Fortune 500. As I look at that, that’s pretty fast” growth. “We’re very committed to it. It’s already a big business and we believe, over time, it will be even larger.”
Cook also defended Apple’s $1 billion lawsuit against Qualcomm, accusing the chip maker of using “monopoly power” to raise prices.
Qualcomm has a “standards essential” patent, Cook says, that carries “a responsibility to offer it to everyone that would like it” under fair, resaonable and non-discriminatory terms. “Qualcomm has not made such an offer to Apple.” Since there’s a dispute over how much Qualcomm is owed, “you don’t know how much to pay….We need the courts to decide that unless we’re able to settle between us.”
The chip company, he adds, “is trying to charge Apple a percentage of the total iPhone value.” But the chips are “one small part of what an iPhone is. It has nothing to do with the display or touch ID or a gazillion other innovations that Apple has done. We don’t think that’s right. So we’re taking a principled stand.”