SAN FRANCISCO -- Apple (AAPL) CEO Tim Cook on Tuesday dismissed complaints that the company has a "Depression-era" attitude about hoarding cash, called activist shareholder David Einhorn's lawsuit challenging a proxy that would limit the ability to create a special class of stock "a silly sideshow," and said his engineers have not lost their innovative edge.
Speaking at a Goldman Sachs technology conference, Cook reiterated that Apple is seriously considering returning more cash to shareholders now that its cash stockpile has grown to $137 billion as of the end of the December quarter. Roughly two-thirds of the stockpile is held overseas.
"Apple doesn't have a Depression-era mentality," Cook said. "Apple makes bold and ambitious bets on products and we are conservative financially."
While some analysts have worried that the company might be losing some of its innovative spirit since co-founder Steve Jobs died in October, 2011, Cook said Apple continues to believe "there are no limits."
"Innovation is so deeply embedded in Apple's culture," he said. "The desire among our people is to make not just good products but the best products in the world."
Cook added, "The only thing we will never do is make a crappy product. That's the only religion we have. We must do something great, something bold, something ambitious."
Cook called the lawsuit filed by Einhorn's Greenlight Capital hedge fund a "misunderstanding" and said if Apple were ever to issue preferred stock -- which Einhorn is calling for -- the company would first seek shareholder approval. Last year, the Cupertino company announced its first quarterly dividend since 1995 -- $2.65 a share beginning in August -- as shareholders called on Apple to reward investors with a slice of its cash.
Greenlight Capital's suit seeks to halt a company-sponsored proxy proposal that would eliminate "blank check" preferred stock that would pay a dividend to shareholders; the proposal is scheduled to be voted on during Apple's annual shareholder meeting on Feb. 27.
"Now, we do have some cash," Cook said, "but it's a privilege to be in this position. Last quarter, cash flow from operations for Apple was over $23 billion. It's an incredible privilege for us to be in this position that we can seriously consider returning additional cash to shareholders."
The company spent $10 billion on capital expenditures last year and will likely do the same this year, Cook said. Apple will not buy large companies simply to increase revenue, he added.
Apple's stock price has plunged some 35 percent in recent months, which some critics attribute to increasing competition from competitors such as Samsung and Google (GOOG) in the smartphone and tablet markets.
Cook noted that the current smartphone market, which Apple kick-started with the introduction of the iPhone in 2007, has reached 700 million units a year globally and is expected to double to 1.4 billion in four years.
"I see a market that is incredible to be in -- maybe the best market of all times," he said. "Apple has enormous momentum."
When asked about whether Apple would build an iPhone with a larger screen like Samsung, Cook demurred and instead took a subtle swipe at his rival, a leader in OLED display research. He said OLED displays were inferior to Apple's Retina display. Apple believes a great consumer experience goes beyond screen size, he said.
Cook also took at jab at competitors in the PC industry, which traditionally competed over "specs and price," not creating a great consumer experience. Apple concluded long ago that it could not create a "great" computer for less than $1,000, he said. However, Apple eventually hit lower price points with its iPad, including the $329 starter iPad mini introduced last fall.
Cook did not directly address the topic of whether Apple plans to roll out a low-end iPhone. Instead, he pointed to the company's iPod line of music players. The first one sold for $399. Now the company offers a range of iPods, with a low-end device starting at $49.
"Instead of saying how can we cheapen this iPod to get it lower, we say, 'How can we do a great product and do it at a price to sell it at $49?'" he said.
Cook also said the consumer tablet market, which Apple also created, is in its infancy. He said the company sold 23 million iPads last quarter, even as it had a tough time meeting the demand for its new iPad mini. During the same period, Cook said Hewlett-Packard (HPQ) sold 15 million PCs.
"The iPad is the poster child of the post-PC revolution," he said.
Contact John Boudreau at 408-278-3496; follow him at Twitter.com/svwriter.