Latest / Bloomberg Intelligence / Instant Reaction: Apple Names John Ternus Next CEO, Tim Cook Becomes Chairman

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Instant Reaction: Apple Names John Ternus Next CEO, Tim Cook Becomes Chairman · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
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  Speaker 2: This is a breaking news update from Bloomberg.
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  Speaker 3: Instant reaction and analysis from our three thousand journalists and
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  Speaker 3: analysts around the world.
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  Speaker 1: John Turnas has been named CEO of Apple and Tim
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  Speaker 1: Cook named executive chair.
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  Speaker 4: I'm going right to the press release from the company
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  Speaker 4: Apple announcing that Tim Cook will become executive chairman of
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  Speaker 4: Apple's Board of Directors and John Turnas, Senior VP of
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  Speaker 4: Hardware Engineering, will become Apple's next chief executive officer, effective
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  Speaker 4: on September one, twenty twenty six, so that's later this year. Transition,
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  Speaker 4: which was approved unanimously by the Board of Directors, follows
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  Speaker 4: a thoughtful long term succession planning process Tim Cook continuing
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  Speaker 4: Tim in his role as CEO through the summer as
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  Speaker 4: he works closely with Turnus on a smooth transition. As
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  Speaker 4: executive chairman, Cook will assist with certain aspects of the company,
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  Speaker 4: including engaging with policymakers around the world. We have talked
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  Speaker 4: certainly with our mark germat Good at that about the
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  Speaker 4: role that Tim Cook has played with this white house,
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  Speaker 4: but really with global leaders and guiding this company.
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  Speaker 1: Yeah, huge news in the world of Apple, the world
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  Speaker 1: of technology the world of American companies and global companies.
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  Speaker 1: Apple has named Tim Cook executive chairman John Turnis as CEO.
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  Speaker 1: Turnus will join the board of directors, also effective on
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  Speaker 1: September first, Tim Cook will be executive chair. Tim Cook
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  Speaker 1: will remain CEO of Apple through September first through the summer.
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  Speaker 1: John Turnis will become CEO on September first. I want
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  Speaker 1: to bring in Bloomberg News Senior executive editor for Global Technology,
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  Speaker 1: Tom Giles. Tom joins us from New York. Hey, Tom,
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  Speaker 1: just your reaction to I think what a lot of
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  Speaker 1: people are surprised by the timing.
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  Speaker 3: Well, it wasn't clear that it was going to happen
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  Speaker 3: this quickly when we last wrote on this. As you
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  Speaker 3: mentioned in the Big Take, there was a sense Tim
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  Speaker 3: Cook has been rather coy about this. How quickly is
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  Speaker 3: it going to happen? We knew that Turnus was the
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  Speaker 3: air apparent, We just didn't know how quickly it was
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  Speaker 3: going to happen. But look, Tim Cook has turned sixty
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  Speaker 3: sixty five. He has had a great run in many
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  Speaker 3: respects at Apple. Yes, we've talked a lot about the
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  Speaker 3: fact that they are not as far along in the use.
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  Speaker 2: Of AI as they would like to be, as they
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  Speaker 2: should be.
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  Speaker 3: Frankly, given who they are that said, he is the
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  Speaker 3: person he took the baton from Steve Jobs. He was
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  Speaker 3: remains operationally supply chain wise, a genius in terms of
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  Speaker 3: making sure that Apple has the components that it needs
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  Speaker 3: at the exact moment that it needs them. He is
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  Speaker 3: the one who has been really the many years behind
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  Speaker 3: the scenes before coming to the to the forefront of
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  Speaker 3: really enabling Apple to be as successful as it has been.
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  Speaker 3: If you don't have the supply chain down, it's really
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  Speaker 3: hard to create those those devices with the margins that
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  Speaker 3: they that they have and as timely a manner as
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  Speaker 3: they as they are. You know, it's been a rough
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  Speaker 3: few years for Apple in some respects with regard to
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  Speaker 3: you know, we've talked about their car efforts that went
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  Speaker 3: to know where, we talked about their TV efforts and AI.
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  Speaker 3: So there have been these moments over the last several
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  Speaker 3: years of like, well, where's that next killer product going
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  Speaker 3: to come from? He has he has led them into
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  Speaker 3: lots of new and really interesting areas in terms of media,
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  Speaker 3: in terms of in terms of air pods, there is
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  Speaker 3: a lot of really interesting new stuff going on there,
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  Speaker 3: but not the.
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  Speaker 2: Stuff that really grabs everybody's head, the headline.
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  Speaker 1: But Tom all that to say, there's no indication that
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  Speaker 1: this was something that the board pushed for at this point.
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  Speaker 1: This was you know, on Tim Cook's own accord, at
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  Speaker 1: this point.
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  Speaker 3: There's no indication. Yeah, there's no indication of anything along
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  Speaker 3: those lines. I mean, this is something that is being
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  Speaker 3: seen as orderly.
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  Speaker 2: There's a little bit.
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  Speaker 3: Of a tickdown stock last I checked in late trading.
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  Speaker 3: But I mean, anybody who's been following Apple, anybody who's
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  Speaker 3: been reading ARC would know this was coming. They would
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  Speaker 3: know that Turnus was the person who has the confidence
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  Speaker 3: of Tim Cook and the confidence of the board. You know,
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  Speaker 3: he spent half his life at Apple. He was he
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  Speaker 3: worked on computer monitors, product designed for the iPad, took
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  Speaker 3: over development of the Mac. He's since he's the head
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  Speaker 3: of engineering, hardware engineering since twenty twenty one. Expansion in
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  Speaker 3: the product lineup, functional improvement on products, things like bat
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  Speaker 3: very live performance connectivity. Those sound really nerdy, but they're
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  Speaker 3: hugely important to consumers and users of Apple's products. And
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  Speaker 3: you've seen him start to take on a bigger and
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  Speaker 3: more public role at Apple in recent months. Definitely there
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  Speaker 3: were signs that this was in the offing.
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  Speaker 4: Yeah, I mean, yeah, go ahead, no, no, no, please
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  Speaker 4: go Well, I.
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  Speaker 2: Was just going to make the point that too. You know, Tim,
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  Speaker 2: Tim Cook is leaving.
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  Speaker 3: At A at a an actually pretty good time. When
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  Speaker 3: you look at the stock price over multiple years, you know,
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  Speaker 3: it's it's down off the high reached in December, but
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  Speaker 3: it's it's it's hovering pretty close to that. So this
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  Speaker 3: is someone who has had the confidence of the investor
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  Speaker 3: community as a general rule over you know, of a
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  Speaker 3: very long tenure at Apple.
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  Speaker 4: But to this point, you know, Turnus has really stepped up.
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  Speaker 4: As Mark reported in his story about the air apparent
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  Speaker 4: or possible air apparent, he named turnas you know he
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  Speaker 4: talked about when Apple held that event in New York
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  Speaker 4: earlier in March to announce the MacBook Neo. It was
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  Speaker 4: Turna's not Cook who did the big reveal, right, and
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  Speaker 4: he was on GMA Good Morning America. So he definitely
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  Speaker 4: has been taking a step forward here, Tom.
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  Speaker 3: Yeah, exactly. And they've been expanding his portfolio as well.
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  Speaker 3: Last year got control of that secretive unit developing robots.
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  Speaker 3: It's that's actually slated for release as early as next year.
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  Speaker 3: He's taking a bigger role in product marketing, as we've
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  Speaker 3: talked about, even to the point of editing copy for
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  Speaker 3: the website as one of the anecdotes that Mark got
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  Speaker 3: into his story. So his his profile has been rising,
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  Speaker 3: his portfolio has been broadening, and and now he's you know,
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  Speaker 3: he's going to be the guy starting in a few months.
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  Speaker 1: Carol, I just want to say I'm doing a little
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  Speaker 1: bit of back of the envelope terminal math here going
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  Speaker 1: back to January of twenty eleven.
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  Speaker 4: It looks like a pretty nice chart.
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  Speaker 5: It is.
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  Speaker 1: I mean, if you're yeah, if you're a shareholder of Apple,
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  Speaker 1: since then, you're pretty happy. Shares of Apple up more
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  Speaker 1: than twenty two hundred percent just since then, the S
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  Speaker 1: and P five hundred up four hundred and sixty five percent.
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  Speaker 1: So on an annual basis, the Apple since Tim Cooke
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  Speaker 1: took over Seer was announced as interim CEO was is
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  Speaker 1: up twenty four point four percent and annualized, okay, versus
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  Speaker 1: the S and P five hundred fourteen percent.
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  Speaker 4: Well on that, and we're showing that right now for
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  Speaker 4: those who are watching on YouTube and Bloomberg originals.
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  Speaker 2: Tom.
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  Speaker 4: You know, the thing is in the press release, as
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  Speaker 4: Tim and I have gone through it, it did say
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  Speaker 4: that Tim Cook will become executive chairman of Apple's board
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  Speaker 4: of directors. He's going to assist with certain aspects of
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  Speaker 4: the company, including engaging with policy makers around the world,
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  Speaker 4: and I think about that share price and move up.
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  Speaker 4: The Apple supply chain is renowned, and as you said,
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  Speaker 4: Tim Cook is the guy who knows this, but he's
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  Speaker 4: had to negotiate with some leaders, whether it's over in
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  Speaker 4: China where they have such a big footprint and then
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  Speaker 4: as they've been pivoting to India and elsewhere, but then
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  Speaker 4: also dealing with a very complicated and sometimes difficult White
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  Speaker 4: House and administration where you don't want to be on
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  Speaker 4: the wrong side of the president and his team. And
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  Speaker 4: Tim Cook has done this, I think many would say flawlessly,
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  Speaker 4: really really well. So having him in that position is
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  Speaker 4: an important one.
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  Speaker 3: You need somebody who can play a very diplomatic role
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  Speaker 3: on a global stage, and who better than Tim Cook,
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  Speaker 3: the guy who's been there for so long and has
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  Speaker 3: really been playing that role. As you said, you know,
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  Speaker 3: it's there's a delicate, delicate dance between Silicon Valley and
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  Speaker 3: the White House.
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  Speaker 2: Tim Cook has you know, demonstrated.
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  Speaker 3: That he has the ear of the president and knows
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  Speaker 3: how to speak in a language that appeals to Donald Trump.
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  Speaker 3: He gave him what was the.
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  Speaker 5: Big golden iPhone?
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  Speaker 1: Is that what it was?
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  Speaker 2: Ihone?
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  Speaker 3: You know, at a at a at a at at
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  Speaker 3: an event at the White House. I mean, you know,
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  Speaker 3: I think that every every big, every big tech ceo
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  Speaker 3: has had to learn how.
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  Speaker 4: To It was a glass sculpture with a twenty four
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  Speaker 4: carrat goal base because I think the glass was the glass?
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  Speaker 4: Was it an iPhone that they maybe use in in
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  Speaker 4: their products Apple?
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  Speaker 3: The point, the point being that you know, it's whether
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  Speaker 3: it's flattery, whatever it is that you know, you need
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  Speaker 3: to you need to know how to speak the language kiss, throing,
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  Speaker 3: whatever metaphor you want to use. As you said, he's
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  Speaker 3: also there's a very delicate balance that he's had to
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  Speaker 3: strike with regard to China and India. As we saw
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  Speaker 3: first during the pandemic and then as the the trade
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  Speaker 3: war really burst onto the scene in the last several years.
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  Speaker 3: The we've learned the risks of overdependence on one particular
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  Speaker 3: area of the world.
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  Speaker 2: For your supply chain.
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  Speaker 3: So Tim Cook has had to navigate and you know,
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  Speaker 3: depend more on India war manufacturing more production there, and
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  Speaker 3: at the same time not go so swiftly, so quickly
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  Speaker 3: and recklessly that you alienate China, which remains a big
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  Speaker 3: important market. Now there's also a great deal of competition,
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  Speaker 3: and competition has been really rising in China for the
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  Speaker 3: iPhone over the last several years. And you've seen this
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  Speaker 3: whole bunch of new uh manufacturers there, Apo, Vivo, Huawei
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  Speaker 3: all becoming increasingly important competitors there. But at the same time,
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  Speaker 3: iPhone is still popular and in many aspects and many
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  Speaker 3: parts of the country, and and so you you don't
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  Speaker 3: want to do something that's going to alienate the Chinese.
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  Speaker 3: At the same time, you have to diversify your supply chain.
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  Speaker 3: And that's something that Tim Cook has been doing and
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  Speaker 3: you know, it's it's it's it's a juggling act and
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  Speaker 3: he'll he'll be able to continue to do that in
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  Speaker 3: his new role as executive chairman.
• 11:16
  Speaker 1: I want to bring in man Deep Singh Thunk.
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  Speaker 4: Yeah, I know it's feeling kind of mellow today as
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  Speaker 4: we waited for more on the war and then bam, he's.
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  Speaker 1: Global tech research head at Bloomberg Intelligence. I think you know,
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  Speaker 1: none of us who've been following this or speaking to
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  Speaker 1: Mark Kerma and reading Mark's reporting is surprised by John
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  Speaker 1: turnas we know him. Thanks to Mark's reporting, I think
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  Speaker 1: what we're surprised about is the timing here. What's your reaction.
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  Speaker 5: Look, I think it was inevitable that there would have been,
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  Speaker 5: you know, some sort of succession at Apple, and to
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  Speaker 5: my mind, appointing the hardware chief as the next CEO
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  Speaker 5: makes a ton of sense because this company is still
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  Speaker 5: reliant on hardware at the end of the day. That
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  Speaker 5: is what drives that one hundred billion in free cash
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  Speaker 5: flow that they generate. It's the hardware refreshes and you know,
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  Speaker 5: they have missed out on the LM side. There are
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  Speaker 5: still questions that need to be answered in terms of
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  Speaker 5: what the new CEO strategy will be in terms of AI,
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  Speaker 5: CAPEX and llms. But if there was one person internally
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  Speaker 5: who would have thought it should have been their hardware chief,
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  Speaker 5: and so that's a good point.
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  Speaker 4: I always think about like the right guy for the
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  Speaker 4: right time, and we've been talking a lot about Tim
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  Speaker 4: Cook and how he understood the global supply chain really
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  Speaker 4: in building that, and so that was maybe his tenure
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  Speaker 4: for john turnas. Is it, Mandy about protecting the hardware
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  Speaker 4: and the sales that they've got and then also trying
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  Speaker 4: to figure out how do you expand it? Is that
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  Speaker 4: part of what he has to do or is it
• 12:41
  Speaker 4: about really just protecting the core here.
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  Speaker 5: So look, when Johnny I've left Apple and he joined
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  Speaker 5: open Ai, there was a lot of speculation around what
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  Speaker 5: that new form factor will be on the hardware side
• 12:54
  Speaker 5: when it comes to consuming llms on the edge. Right now,
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  Speaker 5: all the llms are or running on data centers because
• 13:03
  Speaker 5: they need a lot of power. There will be a
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  Speaker 5: point when the lms can be distilled and run on device,
• 13:09
  Speaker 5: and that's the time where Apple has to have that
• 13:13
  Speaker 5: perfect form factor. I mean, we know their vertical integration
• 13:16
  Speaker 5: has served them well in terms of having their own
• 13:19
  Speaker 5: chip making sure the specs are customized to running Apple's
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  Speaker 5: operating system. They need to do the same for LLM
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  Speaker 5: and that's where you know having somebody who runs the
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  Speaker 5: hardware division is the right guy to make that transition.
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  Speaker 5: My guess is they will probably be more acquisitive than
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  Speaker 5: they have been under Tim Cook.
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  Speaker 1: For what what would they buy?
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  Speaker 5: I mean, there are so many GENAI native companies with
• 13:44
  Speaker 5: very you know, high valuations in the private market.
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  Speaker 2: They may have.
• 13:49
  Speaker 1: Some of those are way too expensive to be bought
• 13:52
  Speaker 1: by anyone.
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  Speaker 5: Yeah, Look, I mean a company like company like Anthropic
• 13:56
  Speaker 5: has seen its valuation double almost you know, every three months,
• 13:59
  Speaker 5: so they are probably out of reach right now, but
• 14:02
  Speaker 5: they perplexity, perplexity cursor. There are a lot of names
• 14:09
  Speaker 5: that are still in that range where yes, you may
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  Speaker 5: have to end up spending fifty two hundred billion dollars,
• 14:15
  Speaker 5: but there will be consolidation and.
• 14:17
  Speaker 1: That's a lot.
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  Speaker 5: But look, that's where because they haven't really invested in
• 14:24
  Speaker 5: their own AI efforts, they will have to acquire it.
• 14:27
  Speaker 4: So that idea of kind of is it Gemini that
• 14:29
  Speaker 4: they were working on, or is Google's AI not Gemini Gemini. Yeah,
• 14:34
  Speaker 4: that idea of kind of letting them figure it out
• 14:37
  Speaker 4: and then rely on that.
• 14:38
  Speaker 1: I think it's a great idea.
• 14:39
  Speaker 4: Well I kind of I thought it was too, but
• 14:42
  Speaker 4: that doesn't make sense. I mean, it holds them back.
• 14:45
  Speaker 5: When it comes to AI. I think a company of
• 14:48
  Speaker 5: Apple size wants to have its own LM. That's what
• 14:52
  Speaker 5: Amazon did Amazon, you know, invested in Anthropic, but then
• 14:56
  Speaker 5: in parallel they were training their own LLM, and so
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  Speaker 5: Microsoft invested in open Ai. Now the relationship isn't going
• 15:05
  Speaker 5: very well. Microsoft is investing in its own LLLM. So
• 15:09
  Speaker 5: from that standpoint, I would be surprised if Apple strategies
• 15:14
  Speaker 5: just to rely on Gemini, even though Google has been
• 15:17
  Speaker 5: a great partner over the years for them.
• 15:19
  Speaker 1: We should go back to the stock reaction here, it's
• 15:21
  Speaker 1: just down about four tenths of one percent right now.
• 15:24
  Speaker 1: It doesn't seem like investors, at least in the after
• 15:26
  Speaker 1: hours envolumes. Then we should wait for tomorrow. Of course,
• 15:30
  Speaker 1: are two concerned with this?
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  Speaker 5: Yeah, I mean I think this is probably the best
• 15:35
  Speaker 5: transition you could have hoped for a company like Apple,
• 15:38
  Speaker 5: you know, where the internal guy who was leading the
• 15:42
  Speaker 5: most important division in the company becomes the CEO. And look,
• 15:48
  Speaker 5: I mean strategically there are still questions that you want
• 15:52
  Speaker 5: answers for, but this is probably laying out a roadmap
• 15:57
  Speaker 5: where they're saying, you know, he'll be CEO offecting September
• 16:01
  Speaker 5: and uh, he'll have some months to plan out you know,
• 16:05
  Speaker 5: what he wants to do differently versus what Tim Kok
• 16:07
  Speaker 5: was doing, especially when it comes to the acquisition side.
• 16:10
  Speaker 5: I feel that's the one area where Apple has missed
• 16:14
  Speaker 5: out and you want to see, you know, a more
• 16:18
  Speaker 5: sense of urgency when it comes to acquisitions.
• 16:20
  Speaker 4: Well, and it does feel like Tim Cook, you know,
• 16:22
  Speaker 4: not going anywhere. So it does feel actually to me
• 16:25
  Speaker 4: very orderly.
• 16:26
  Speaker 1: Springs where he's got the vacation house.
• 16:27
  Speaker 4: But it feels very orderly like he's going to be around.
• 16:31
  Speaker 4: It's not till September, right, He's going to help with
• 16:33
  Speaker 4: the transition, and then he's going to still be there
• 16:35
  Speaker 4: on those big global issues that can be super complicated
• 16:39
  Speaker 4: as a big global company in terms of dealing with
• 16:41
  Speaker 4: leaders right where your supply chain in is and as
• 16:44
  Speaker 4: you move it around. He's going to still do that stuff.
• 16:46
  Speaker 4: Or do you feel like that's just just in the
• 16:48
  Speaker 4: press release or do you think that's real?
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  Speaker 1: I think it's I have a heart. Tim Cook has
• 16:52
  Speaker 1: been his career. No, I know, I know, and a
• 16:55
  Speaker 1: lot of I mean Mark, Mark has talked to us
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  Speaker 1: about this that outside of Apple, like I mean he's
• 17:00
  Speaker 1: known for somebody who works out and who works at Apple. Yeah,
• 17:06
  Speaker 1: but that's what he works on, No, he right, he
• 17:09
  Speaker 1: is very dedicated to this company. I would be I
• 17:12
  Speaker 1: would be shocked, is my own personal opinion. I would
• 17:15
  Speaker 1: be shocked to see him to go completely.
• 17:18
  Speaker 4: What's your take though on that.
• 17:19
  Speaker 5: Is that we are seeing some very you know, long
• 17:24
  Speaker 5: tenured CEOs leave Adobe CEO he's stepping down. So look,
• 17:29
  Speaker 5: these guys have been at the home for almost two
• 17:32
  Speaker 5: decades and at this point they feel, you know, there
• 17:37
  Speaker 5: is too big off a change that's going around them,
• 17:40
  Speaker 5: and it's good to have a new leader. And I'm
• 17:44
  Speaker 5: sure there will be things that get changed under the
• 17:48
  Speaker 5: new leadership.
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  Speaker 4: I think he was pressured.
• 17:50
  Speaker 5: Tim Cook, No, no, I would be very surprised if
• 17:53
  Speaker 5: that was the case.
• 17:55
  Speaker 1: We should pull up the chart again from twenty eleven
• 17:57
  Speaker 1: to twenty twenty six. Okay, okay, show show Apple's returns
• 18:02
  Speaker 1: over that period of time. Where what look at that
• 18:05
  Speaker 1: nineteen If anything, he was praised for April from August.
• 18:09
  Speaker 5: He was praised for his capital allocation strategy and you
• 18:13
  Speaker 5: know Bsher Hatsway became Warren Buffett became a shareholder. So
• 18:17
  Speaker 5: Apple's capital allocation has been top notch. But probably I
• 18:22
  Speaker 5: would say in the last two three years is where
• 18:24
  Speaker 5: there are question marks. Around why didn't they raise kapex
• 18:28
  Speaker 5: for these AI data centers and all their Max seven
• 18:31
  Speaker 5: piers were investing.
• 18:33
  Speaker 4: So I still think there's something to like kind of
• 18:35
  Speaker 4: waiting for these guys to figure it out.
• 18:37
  Speaker 1: They didn't make the first music player, they didn't make
• 18:39
  Speaker 1: the first tablet, they didn't make the first smartphone, but
• 18:41
  Speaker 1: many people would say they've made the best of all
• 18:43
  Speaker 1: those things. Maybe the same thing happens with AI.
• 18:46
  Speaker 5: I mean, they have a lock on distribution and it's
• 18:49
  Speaker 5: still there, but this is like too risky of a
• 18:52
  Speaker 5: strategy where you completely miss out on one of the
• 18:56
  Speaker 5: biggest secular trends that probably I think we're going to
• 19:00
  Speaker 5: witness over the next two three decades. And you're you're saying,
• 19:04
  Speaker 5: I'm just gonna rely on distribution.
• 19:07
  Speaker 1: M h m hmmmmmm hm