Following Warren Buffett’s investment in Apple, Tim Cook, the CEO of Apple told CNBC that Berkshire Hathaway’s major investment in Apple “shows that Warren Buffett understands the iPhone maker is really a consumer products company at its core, rather than a technology company.”
In his interview with Becky Quick, Cook said, “Buffett has been very clear, he didn’t invest in technology companies and companies he didn’t understand. He’s been totally clear with that. And so he obviously views Apple as a consumer company.”
Tim Cook Highlights Services Business of Apple
For the first time, Tim Cook attended Berkshire shareholders meeting in Omaha, Nebraska, where he said, “We believe that technology should be in the background, not the foreground, and that technology should empower people to do things and help them do things they couldn’t do otherwise.”
Cook further added, “We’re in the tech industry, but we work at that intersection of technology and the liberal arts and the humanities. And so we make products for people, and so the consumer’s at the center of what we do.”
Notably, Apple’s hardware sales growth slows, and the company is increasing its services business.
After dwindling iPhone sales Apple has changed its tune and began to glorify its services business. Instead of speaking about its year-over-year iPhone revenue March quarter fall (17%), Apple has been highlighting revenue from its services.
The company tries to indicate that iPhone sales are not a critical number to watch. Apart from its services business like Apple Music and iCloud, Apple talks about its products like AirPods and Apple Watch, which grew 16% in the first three months of 2019 compared to a year ago and hit a record.
Cook believes that Buffett’s faith in Apple “seemed like recognition” of this growth. “We run the company for the long term. And so the fact that we’ve got the ultimate long-term investor in the stock is incredible”, Cook said while speaking about what it means to have Berkshire in Apple’s corner.
Buffett, nicknamed Oracle of Omaha, has always been cautious in his investment decisions especially when he has to invest in technology companies.
Growing saturation in the smartphone market and slow sales of iPhones have hit Apple badly. Once a tech giant and hardware company is now taking pride in calling itself a consumer products company. What does this indicate? Smart readers can read between the lines.
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Image Credit: CNBC.com