Host/Interviewer (3:08)

He's good at that.

Carol (3:09)

About the role that Tim Cook has played with this White House, but really with global leaders and guiding this company.

Mandeep Singh (3:16)

Yeah.

Host/Interviewer (3:16)

Huge news in the world of Apple, the world of technology, the world of American companies and global companies. Apple has named Tim Cook Executive Chairman John Turner as CEO. Turnus will join the Board of directors also effective on September 1st. Tim Cook will be executive chair. Tim Cook will remain CEO of Apple through September 1st, through the summer. John Ternus will become CEO on September 1st. I want to bring in Bloomberg News senior Executive editor for Global Technology, Tom Joy Giles. Tom joins us from New York. Hey Tom, just your reaction to I think what a lot of people are surprised by the timing.

Tom Giles (3:59)

Well, it wasn't clear that it was going to happen this quickly. When we last wrote on this, as you mentioned in the big take, there was a sense Tim Cook has been rather coy about this. How quickly is it going to happen? We, we knew that Turnus was the heir apparent. We just didn't know how quickly it was going to happen. But look, Tim Cook has turned 60, 65. He has had a great run in many respects at Apple. Yes, we've talked a lot about the fact that they are not as far along in the use of AI as they would like to be, as they should be, frankly, given who they are. That said, he is the person he took the baton from Steve Jobs. He was, remains operationally supply chain wise, a genius in terms of making sure that Apple has the components that it needs at the exact moment that it needs them. He is the one who has been really the for many years behind the scenes before coming to the, to the forefront of really enabling Apple to be as successful as it has been. If you don't have the supply chain down, it's really hard to create those, those devices with the margins that they, that they have and as timely a manner as they, as they are. You know, it's been a rough few years for Apple in some respects with regard to, you know, we've talked about their car efforts that went nowhere. We've talked about their TV efforts and AI. So there have been these moments over the last several years of like, well, where's that next killer product going to come from? He has, he led them into lots of new and really interesting areas in terms of media, in terms of AirPods. There is a lot of really interesting new stuff going on there, but not the stuff that really grabs everybody's headlines.

Host/Interviewer (6:05)

But Tom, all that to say there's no indication that this was something that the board Pushed for at this point. This was, you know, on Tim Cook's own accord. At this point there's, there's no indication,

Tom Giles (6:16)

yeah, there's no indication of anything along those lines. I mean this is something that is being seen as orderly. There's a little bit of a tick down stock, last I checked in late trading. But I mean anybody who's been following Apple, anybody who's been reading Ark, would know this was coming. They would know that Ternus was the person who has the confidence of Tim Cook and the confidence of the board. You know, he spent half his life at Apple. He, he was, he worked computer monitors, product design for the iPad, took over development of the Mac. He's the head of engineering, Hardware engineering since 2021 Expansion in the product lineup. Functional improvement on products, things like battery life, performance, connectivity. Those sound really nerdy, but they're hugely important to consumers and users of Apple's products. And you've seen him start to take on a bigger and more public role at Apple in recent months. Definitely there were signs that this was in the offing.

Mandeep Singh (7:26)

Yeah, go ahead.

Carol (7:26)

No, no, no, please go.

Tom Giles (7:28)

Well, I was just going to make the point that too, you know, Tim, Tim Cook is leaving at a, at a, an actually pretty good time when you look at the stock price over multiple years. You know, it's, it's down off the high reached in December, but it's, it's, it's hovering pretty close to that. So this is someone who has had the confidence of the investor community as a general rule over, you know, of a very long tenure at Apple.

Carol (7:58)

But to this point, you know, Ternus has really stepped up. As Mark reported in his story about the heir apparent or possible heir apparently he named Turner's, you know, he talked about when Apple held that event in New York earlier in March to announce the MacBook Neo, it was Turner's, not Cook who did the big reveal. Right, right. And he was on gma Good Morning America. So he definitely has been taking a step forward here, Tom.

Tom Giles (8:23)

Yep, exactly. And they've been expanding his portfolio as well. Last year, got control of that secretive unit developing robots. It's, that's actually slated for release as early as next year. He's taking a bigger role in product marketing, as we've talked about, even to the point of editing copy for the website is one of the anecdotes that Mark got into his story. So his, his profile has been rising, his portfolio has been broadening and, and now he's, you know, he's going to be the Guy starting in a few months.

Host/Interviewer (9:03)

Carol, I just want to say I'm doing a little bit of back of the envelope terminal math here going back to January of 2011.

Carol (9:09)

It looks like a pretty nice chart.

Host/Interviewer (9:10)

It is. I mean, if you're. Yeah. If you're a shareholder of Apple since then, you're pretty happy. Shares of Apple up more than 2200% just since then. The S&P 500 up 465%. So on an annual basis, the Apple since Tim Cook took over as CEO, was announced as interim CEO, was, is up 24.4% and annualized. Okay. Versus the S&P 514%.

Carol (9:36)

Well, on that. And we're showing that right now for those who are watching on YouTube and Bloomberg originals. Tom, you know, the thing is, in the press release as, as Tim and I have gone through it, it did say that Tim Cook will become executive chairman of Apple's board of directors. He's going to assist with certain aspects of the company, including engaging with policymakers around the world. And I think about that share price and move up. The Apple supply chain is renowned and said Tim Cook is the guy who knows this, but he's had to negotiate with some tricky leaders, whether it's over in China, where they have such a big footprint, and then as they've been pivoting to India and elsewhere, but then also dealing with a very complicated and sometimes difficult White House, an administration where you don't want to be on the wrong side of the President and his team. And Tim Cook has done this, I think many would say flawlessly, really, really well. So having him in that position is an important one.

Tom Giles (10:33)

You need somebody who can play a very diplomatic role on a global stage. And who better than Tim Cook, the guy who's been there for so long and has really been playing that role. As you said, you know, there's a delicate, delicate dance between Silicon Valley and the White House. Tim Cook has, you know, demonstrated that he has the ear of the President and knows how to speak in a language that appeals to Donald Trump. He gave him the. What was the golden iPhone?

Host/Interviewer (11:11)

Is that what it was? An iPhone?

Tom Giles (11:13)

You know, at a, at a, at, at an event at the White House. I mean, you know, I think that every, every big, every big tech CEO has had to learn how to.

Carol (11:26)

It was a glass sculpture with a 24 karat gold base. Because I think the glass. Was the glass.

Host/Interviewer (11:31)

Was it an iPhone?

Carol (11:32)

What was it that they maybe use in their products? Apple shaped cutout engraving.

Tom Giles (11:39)

The point being that whether it's flattery, whatever it is that you need to know how to speak the language, kiss the ring, whatever metaphor you want to use. As you said, there's a very delicate balance that he's had to strike with regard to China and India, as we saw first during the pandemic and then as the. The trade war really burst onto the scene in the last several years, the. We've learned the risks of overdependence on one particular area of the world for your supply chain. So Tim Cook has had to navigate, you know, depend more on India, more manufacturing, more production there, and at the same time not go so swiftly, so quickly and recklessly that you alienate China, which remains a big important market. Now, there's also a great deal of competition, and competition has been really rising in China for the iPhone over the last several years. And you've seen this whole bunch of

Mandeep Singh (12:44)

new

Tom Giles (12:46)

manufacturers there, Oppo, Vivo, Huawei, all becoming increasingly important competitors there. But at the same time, iPhone's still popular in many aspects and many parts of the country. And so you don't want to do something that is going to alienate the Chinese. At the same time, you have to diversify your supply chain. And that's something that Tim Cook has been doing, and it's a juggling act, and he'll be able to continue to do that in his new role as executive chairman.

Host/Interviewer (13:21)

I want to bring in Mandeep Singh.

Carol (13:23)

Who'd have thunk, yeah, I know. It was feeling kind of mellow today as we waited for more on the war, and then bam.

Host/Interviewer (13:28)

He's global tech research head at Bloomberg Intelligence. I think, you know, none of us who've been following this or speaking to Mark Gurman, reading Mark's reporting, is surprised by John Ternus. We know him thanks to Mark's reporting. I think what we're surprised about is the timing here. What's your reaction?

Mandeep Singh (13:42)

Look, I think it was inevitable that there would have been, you know, some sort of succession at Apple. And to my mind, appointing the hardware chief as the next CEO makes a ton of sense because this company is still reliant on hardware. At the end of the day, that is what drives that 100 billion in free cash flow that they generate. It's the hardware refreshes, and they have missed out on the LLM side. There are still questions that need to be answered in terms of what the new CEO strategy will be in terms of AI, CapEx and LLMs. But if there was one person internally who would have thought if should have been their hardware Chief. And so that's, that's a good appointment.

Carol (14:27)

I always think about like the right guy for the right time. And we've been talking a lot about Tim Cook and how he understood the global supply chain really and building that. And so that was maybe his tenure for John Ternus. Is it Mandy, about protecting the hardware and the sales that they've got and then also trying to figure out how do you expand it? Is that part of what he has to do or is it about really just protecting the core here?

Mandeep Singh (14:49)

So look, when Jony I've left Apple and he joined OpenAI, there was a lot of stories, speculation around what that new form factor will be on the hardware side when it comes to consuming LLMs on the edge. Right now all the LLMs are running on data centers because they need a lot of power. There will be a point when the LLMs can be distilled and run on device and that's the time where Apple has to have that perfect form factor. I mean, we know their vertical integration has served them well in terms of having their own chip, making sure the specs are customized to running Apple's operating system. They need to do the same for LLM and that's where, you know, having somebody who runs the hardware division is the right guy to make that transition. My guess is they will probably be more acquisitive than they have been under Tim Cook.

Host/Interviewer (15:43)

Like, for what, what would they buy?

Mandeep Singh (15:45)

I mean, there are so many gen AI native companies with very, you know, high valuations in the private market. They may have.

Host/Interviewer (15:54)

Some of those are way too expensive to be bought by anyone.

Mandeep Singh (15:57)

Yeah, look, I mean a company like Perplexity, company like Anthropic has seen its valuation double almost, you know, every three months.

Host/Interviewer (16:04)

Yeah.

Mandeep Singh (16:04)

So they are probably out of reach right now. But Perplexity, Perplexity Cursor. There are a lot of names that are still in that range where, yes, you may have to end up spending 50, $200 billion, but there will be consolidation and that's a lot. But look, that's where. Because they haven't really invested in, in their own efforts, they will have to acquire.

Carol (16:32)

So that idea of kind of is it Gemini that they were working on or is it Google's AI or not? Gemini.

Mandeep Singh (16:38)

Gemini, yeah. Yeah.

Carol (16:39)

That idea of kind of letting them figure it out and then rely on

Host/Interviewer (16:43)

that I think is a good, great idea.

Carol (16:45)

Well, I kind of Apple, I thought it was too, but that doesn't make sense.

Mandeep Singh (16:49)

I mean, or holds them back when it comes to AI. I think A company of Apple size wants to have its own. That's what Amazon did. Amazon, you know, invested in Anthropic. But then in parallel they were training their own LLM. And so Microsoft invested in OpenAI. Now the relationship isn't going very well. Microsoft is investing in its own LLM. So from that standpoint, I would be surprised if Apple strategy is just to rely on Gemini, even though Google has been a great partner over the years for them.

Host/Interviewer (17:24)

We should go back to the stock reaction here. It's just down about 410 of 1% right now. It doesn't seem like investors, at least in the after hours and volume is thin. We should wait for tomorrow, of course, are too concerned with this.

Mandeep Singh (17:37)

Yeah, I mean, I think this is probably the best transition you could have hoped for a company like Apple, you know, where the internal guy who was leading the most important division in the company becomes the CEO. And look, I mean, strategically there are still questions that you want answers for, but this is probably laying out a roadmap where they're saying, you know, he'll become CEO effective September and he'll have some months to plan out, you know, what he wants to do differently versus what Tim Cook was doing. Especially when it comes to the acquisition side. I feel that's the one area where Apple has missed out and you want to see, you know, a more sense of urgency when it comes to acquisitions.

Carol (18:25)

Well, and it does feel like Tim Cook, you know, not going anywhere. So it does feel actually to me very orderly.

Host/Interviewer (18:31)

Springs where he's got the vacation house,

Carol (18:32)

but it feels very orderly, like he's going to be around. It's not till September. Right. He's going to help with the transition and then he's going to still be there on those big global issues that can be super complicated as a big global company in terms of dealing with leaders. Right where your supply chain is. And as you move it around, he's going to still do that stuff. Or do you feel like that's just, that's just in the press release or do you think that's real? I think it's real.

Host/Interviewer (18:56)

I have a heart. Tim Cook, this has been his career.

Carol (18:58)

No, I know, I know.

Host/Interviewer (19:00)

And a lot of, I mean, Mark has talked to us about this, that outside of Apple, like, I mean, he's known for, for somebody who, who works out and who works at Apple. Yeah, like that's what he works on.

Carol (19:12)

No, he. Right.

Host/Interviewer (19:14)

He is very dedicated to this company. I would be, I would be shocked is my own personal opinion. I would be Shocked to see him to go completely.

Carol (19:23)

What's your take though on that? Is that a real.

Mandeep Singh (19:25)

We are seeing some very, you know, long tenured CEOs leave Adobe CEO. He's stepping down. So look, these guys have been at the helm for almost two decades and at this point they feel, you know, there is too big of a change that's going around them and it's good to have a new leader and I'm sure there will be things that get changed under the new leadership.

Carol (19:54)

Do you think he was pressured, Tim Cook?

Mandeep Singh (19:56)

No.

Carol (19:56)

No.

Mandeep Singh (19:57)

I would be very surprised if that was the case.

Host/Interviewer (20:00)

We should pull up the chart again from 2011 to 2026.

Carol (20:04)

Okay. Okay.

Host/Interviewer (20:05)

And show show Apple's returns over that period of time. Where. What? Look at that. 19.

Mandeep Singh (20:11)

If anything, he was praised for his April. From August of 2011, he was praised for his capital allocation strategy and you know, Berkshire Hathaway became Warren Buffett became a shareholder. So Apple's capital allocation has been top notch. But probably I would say in the last two, three years is where there are question marks around why didn't they raise capex for these AI data centers and all their max 7 peers were investing.

Carol (20:38)

So I still think there's something to like kind of wait for these guys to figure it out. And they didn't jump in the first

Host/Interviewer (20:43)

music player, they didn't make the first tablet, they didn't make the first smartphone. But many people would say they made the best of all those things. Maybe the same thing happens with AI.

Mandeep Singh (20:51)

I mean, they have a lock on distribution and it's still there. But this is like too risky of a strategy where you completely miss out on one of the biggest secular trends that probably I think we are going to witness over the next two, three decades. And you're, you're saying I'm just going to rely on distribution.

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