Apple CEO Tim Cook spoke with CNBC's Jim Cramer Tuesday about the company's big initiatives as it tries to recover from a negative start to the year after it warned investors of weak revenue and iPhone sales for its first quarter 2019. As of Tuesday's close, Apple's stock was down 4.4 percent year to date.
In the interview, which airs on "Mad Money" at 6 p.m. ET Tuesday, Cook shares why he is optimistic about Apple's future as well as trade negotiations in China. He also addresses the legal battle between Apple and Qualcomm and predicts that Apple's legacy will ultimately center around its innovations in healthcare.
The full transcript from the interview is below. This transcript has been lightly edited for style and clarity.
JIM CRAMER: Tim, you know I always say, "Own it, don't trade it." But right now, people are saying, "Jim, give me the investment case for buying the stock."
TIM COOK: Well, you know, I never try to sell a stock. I try to sell a product.
CRAMER: Never have.
COOK: However, let me tell you the way I look at it. We manage the company for the long term. The most important things in Apple, one, a culture of innovation. This team is unbelievable in creating hardware and software and services and getting them all to work together. It just works.
Second, we have a very large active install base. It hit 1.3 billion a year ago, and we've added about 100 million in the last 12 months. Third, highest customer satisfaction and loyalty in the industry. So you put those two things together, if you got a lot of a big, active install base, and you got a lot of heavy customers, then you have a recurring revenue stream on your product business.
And then because of our ecosystem that we built, which has unbelievable developers in it and an app store to get services out there, we built a services business that was, you know, a little over $7 billion in 2010. Last year for the calendar year, over $41 billion. And we've said that, you know, we're gonna double the 2016 numbers by 2020.
And so we're on a fast clip there. And then, of course, we are shareholder friendly on our capital allocation. So you put all these things together, and those are the most important things for us: innovation, customer satisfaction, and the overall size and loyalty of our customers.
CRAMER: Okay, so most tech companies, I think, don't innovate nearly as much as you. But let me just posit what we got. You take so many risks that I don't think you get credit for. For instance we had what turned to be ridiculous strings around our neck, and then we got the AirPods.
We loved our dumb watch that told time, and now we have a smart watch that saves our lives. We loved the big, fat jack, and then we got the lightning jack. We loved our Sony, $2,000, mirrorless camera, until we got the iPhone X, which takes better pictures. Why do you, therefore, have a 12 multiple? Because to me, that is wrong.
COOK: Yeah, I think it's wrong, too. But I tell you what I focus on is the customer. And so the customers speak every quarter. They speak every year. They speak every day. And the most important thing for us is that they're satisfied. And so when I read the emails and so forth from customers, they're telling me how the Apple Watch has changed their life.
They're telling me how it motivated them to be more fit, be more active. They're telling me that they discovered that they had AFib. (Atrial fibrillation.) They're telling me they found a problem with their heart that they didn't know existed and if they wouldn't've reached out to a doctor, they might've died.