UPDATE 3-Apple unlocks more cash for investors as profit slides

Tue Apr 23, 2013 7:36pm EDT

* Apple to return $100 bln to investors
    * To raise debt for the first time
    * Quarterly revenue rises but profit declines
    * CEO says growth has tempered
    * Shares flat after rising 6 percent

    By Poornima Gupta
    SAN FRANCISCO, April 23 (Reuters) - Apple Inc on
Tuesday bowed to investors' demands to share more of its $145
billion cash pile, while posting its first quarterly profit
decline in more than a decade.
    The new expanded capital plan includes issuing debt for the
first time to fund $100 billion in share repurchases and higher
dividends until the end of 2015. The plan, doubled from a
previous one set last year, makes Apple the largest
dividend-paying company in the world.
    The company's shares, which have declined in recent weeks,
rose sharply but retreated after Chief Executive Tim Cook told
analysts on a conference call that "some really great stuff" was
coming in the fall and 2014. That suggested Apple would have no
new products in the market for the next few months.
    Apple relies heavily on new product launches to drive
revenue growth. It recently refreshed its offerings in October, 
unveiling the 7.9-inch iPad mini and an updated full-size iPad. 
    The new capital plan came as Apple's fiscal second quarter
profit slid 18 percent. While revenue rose 11 percent, it was a
sharp slowdown from 2012 and in previous years.
    Cook also acknowledged that Apple's once stratospheric
growth had tempered but stressed that the company's position
remained strong. 
    "Though we've achieved a credible scale and financial
success, we acknowledge that our growth rate has slowed and our
margins have decreased from the exceptionally high level we
experienced in 2012," he said in a rare admission.
    In the last couple of years, Apple has seen a slowdown in
demand for iPhones and iPads ahead of an expected launch, which
analysts said would hurt its profit for the current quarter.
    Apple is forecasting revenue of $33.5 billion to $35.5
billion this quarter, lagging Wall Street's average prediction
of $38.2 billion.     
    Once considered a near-surefire bet by Wall Street, worries
about slowing growth and narrowing margins have made Apple's
shares among the worst performers this year.
    Since hitting a record close of $702.10 last September, the
world's largest technology company has shed 44 percent or more
than $280 billion of market value - more than the entire market
capitalization of Google Inc.    
    
    A MATURING APPLE
    The collapse of its stock price has incensed investors, who
agitated for more cash directly from the company.
    The tech giant's expanded plan marks a $55 billion increase
to a program unveiled just a year ago.
    Apple earned $9.5 billion or $10.09 a share in the quarter,
down from $11.6 billion or $12.30, a year earlier. 
    The company reported better-than-expected second quarter
revenue of $43.6 billion, beating Wall Street's average forecast
for $42.3 billion, according to Thomson Reuters I/B/E/S, as
iPhone and iPad sales surpassed investors' lowered expectations.
    Wall Street has zeroed in on Apple's industry-leading
margins, which it fears are under pressure as Samsung
Electronics and other Google Android software adopters flood the
market with lower-priced models.
    Gross margins came in at 37.5 percent in the second quarter,
while expectations were for 38.5 percent.
    
 
    
    DIVIDENDS ABOUND
    Apple's shareholders will now get an annual dividend of
$12.20 per share, making Apple one of the highest
dividend-paying companies. With about 940 million shares
outstanding, Apple will return $11.5 billion to shareholders
over 12 months, an amount that exceeds the market values of 200
other corporations in the S&P 500. 
    In a rare move, the company also said it plans to raise debt
for the expanded program, but did not provide any details.
Investors have urged the company to borrow rather than
repatriate money from abroad, where much of its cash is parked,
to avoid incurring heavy taxes.
    While Apple is still growing, it's pace of growth has slowed
as high-end smartphone adoption approaches saturation in the
developed world and it goes head-to-head with increasingly
aggressive rivals in developing countries like China and India
where cheaper models are more popular.