AWT News Update: January 20, 2017

Happy Inauguration Day! We have a few stories for this Friday afternoon that should keep you going into the weekend:

  • Tim Cook sold 30,000 shares of Apple stock, netting him a nice payday
  • Apple's hardware won't be the primary driver of the company's fortunes in the future
  • Apple manufacturing partner Foxconn is building a plant in Shenzhen, China near an Apple R&D center

The text version of the podcast can be viewed below. To listen to the podcast here, click the play button on the player below. Note to Apple News readers: you’ll need to visit Apple World Today in order to listen to the podcast.

Text Version

Hi, this is Steve Sande for Apple World Today, and this is the AWT News Update for January 20, 2017.

Apple CEO Tim Cook got a nice payday this week. He sold 30,000 shares of Apple stock, providing a cool $3.6 million. But don’t worry — he’s not selling all of his stock. Cook still has 1,009,809 shares of Apple stock valued at over $121 million. Cook was paid $8.7 million in 2016, less than the $10.2 million he received in 2015. He and other executives got the pay cuts as the company didn’t meet target performance goals. However, don’t feel too sad for Tim, as he cashed in about $137 million in stock bonuses as he reached his fifth year as CEO. Just yesterday, Apple analyst Neil Cybart gave the executive team a report card, saying that slow Mac and iPad updates as well as slow advances in Siri’s capabilities were areas in which the company needed to improve. The report card gave the company’s product strategy an A-, product pipeline and R&D an A, Operations a B-, Marketing and Storytelling an C+, Culture B+, Public Face an A+, and Financials a B.

We’ve talked about the rumors surrounding Apple’s iPhone 8 that’s expected to bring revolutionary changes in design and technology to the smartphone this year, and it’s expected that the new phone will drastically increase the iOS user base. But hardware won’t be the huge driver for Apple gross profit in the future according to Ben Schachter from Macquarie Research. He sees about 75% of Apple’s gross profit through fiscal year 2021 coming from services including the App Store, AppleCare, and other services like iTunes, iCloud and Apple Pay. Services revenue will grow at about 17 percent per year through 2021 while hardware revenue will only grow at about 2.4 percent in that timeframe. To quote Schachter, “The App Store is one of the best business models ever created. Apple investors need not rely on Apple for all the innovation to drive the model forward. If someone creates a game in their parents’ garage in Taipei or if GE revolutionizes health care with an app, Apple can benefit.” During the July 2016 earnings call, Tim Cook noted that Apple’s services business would become the size of a Fortune 100 company this year.

Nikkei Asian Review is reporting that Apple manufacturing partner Foxconn Electronics will build a factory in conjunction with Apple’s new R&D center in Shenzhen in order to make it easier for the two to develop and test prototype products. Foxconn is developing wireless modules in Shenzhen and will seek orders from Apple for the next-generation iPhones.

That’s all for today; I’ll be back Monday afternoon with another edition of the AWT News Update.