Apple's Tim Cook Explains How to Think About Certain Rumors

During Apple's 2013 Q1 earnings report, Tim Cook was asked about how to interpret various rumors about Apple's build and manufacturing plans. His explanation was helpful -- and sobering for rumor mongers and investors alike.

As a follow up to a question by analyst Bill Schope with Goldman Sachs, Tim Cook said the following. He's talking about recent rumors that Apple had cut orders for iPhone 5 displays.

Bill I know there's been lots of rumors about order cuts and so forth, so let me just take a moment to make comment on this. I don't want to comment on any particular rumor, or I would spend my life doing that.

I would suggest that it's good to question the accuracy of any kind of rumor about build plans ... and also stress that even if a particular data point were factual, it would be impossible to accurately interpret the data point as to what it meant for our overall business.

[That's] because the supply chain is very complex. And we obviously have multiple sources for things, yields might vary, supplier performance may vary, inventory conditions can vary. I mean, there's just an inordinately long list that would make any single data point not a great proxy for what's going on."

The professor explains...

So there you have it folks. Tim Cook, the CEO of Apple, Inc, the master of production management has just provided you with a technical explanation of why a single rumor about Apple's change in build plans or order changes from a supplier is an awful basis on which to extrapolate the total picture for the production of an Apple product. Or base investment plans.

It's a refresher on complex production management that we all knew about, but needed to be reminded of. Mr. Cook's class is now dismissed.