updated 04:10 pm EST, Wed February 15, 2012
'I'm not religious about dividends'
Apple CEO Tim Cook updated analysts and investors on Apple's potential for the future, the secrets of its success and dangled the possibility of future dividends, a hot topic on Wall Street. Cook was addressing the Goldman Sachs Technology Conference in San Francisco when he made his remarks, which covered a wide range of topics.
Cook was excited about the growth potential of the products, particularly in what he called "developing" markets. He pointed out that 25 percent of handset sale growth in the next three years is expected to come just from China and Latin America, and that they and other emerging markets had already dramatically increased sales with Apple from $1.4 billion in 2007 (before the iPhone was available outside the US) to $22 billion in 2011. He saw iCloud as another one of several services that build on and increase the value of existing products, making customers more desirous of the next Apple product.
He credited a "halo effect" of the iPhone and iPod as having made a large portion of the global populations aware of Apple on a consumer level for the first time, and that its subsequent success -- along with services that increased the value of the iPhone such as the App Store and the iTunes Store -- created a platform on which the iPad could easily enter quick acceptance. When it was pointed out that Apple had sold about 55 million iPads in just seven quarters, Cook illustrated the cumulative power of the halo effect by saying "it took us 22 years to sell 55 million Macs. It took us about five years to sell 55 million iPods. It took us three years to sell that many iPhones. So this thing is ... on a trajectory that's off the charts."
He referred to the iPad as a "profound change" in the industry, and that iOS and "that other operating system" for mobile devices are driving the sector's innovation now, not the traditional notebook and desktop computer sectors. He continued to strongly feel, as did many who were testing the original iPad, that the tablet market will become bigger than the PC market.
Cook reiterated that the iPad had cannibalized "some" Mac sales, but said they were cannibalizing more Windows PC sales, making it "a plus" for Apple. Tablets in general, he said will cannibalize PCs, particularly netbooks.
He assured analysts that Apple's enormous cash on hand, now over $100 billion was "always discussed" in terms of the most effective ways to utilize it. He appeared to suggest that the company would eventually pass some of it along to shareholders in the form of dividends, saying "we have more cash than we need to run... the business" and asking for patience from investors "so we can do this in a deliberate way."
Having hinted that the board was considering dividends, Cook himself said he was "not religious" on the topic. "We've spent billions on acquisitions... we spend our money like it's our last penny, and I think shareholders want us to do it that way," he said.