| April 23
April 23 Tim Cook wants investors to "think
different" about Apple: less as a hyper-growth startup-like
company and more as a mature but robust technology corporation
with the world's most lucrative dividend.
If Wall Street follows Apple's famous advertising slogan of
old, it may relieve some of the pressure on Apple's chief
executive, quiet investors' grumbling about its recent share
price slide, and buy the company time to do what it says it does
best: come up with and market new products.
On Tuesday, Apple said it would return $100 billion to
shareholders by the end of 2015, in part by raising its dividend
15 percent and in part by increasing its share buyback program
six-fold to $60 billion.
To some extent, the expanded capital return program helped
mask its first quarterly profit decline in a decade, though
analysts say the more important issue now is what Apple has in
store on the gadget front.
Cook is trying to reset heightened expectations around a
company once universally feted for its ability to captivate both
consumers and Wall Street. In the years following the
introduction of the iPhone in 2007 and the iPad in 2010, the
company established a pattern of consistently blowing past even
the most bullish Wall Street earnings expectations, much to
But on Tuesday, Cook made the rare admission to analysts on
a conference call that Apple's growth has slowed and margins
Apple is a mature company that's now trying to get everyone
to see it as one, analysts say.
"They are modulating into a state where the highs are not as
high and lows are not so low," Forrester analyst Sarah Rotman
Apple shares moved 5 percent higher Tuesday on the back of
the capital program, though the gains evaporated later.
Any gains would have come as little consolation to investors
who have watched Apple shed more than $280 billion in market
value in the last few months as investors adjusted to a new,
Roger Kay, president of researcher and consultant Endpoint
Technologies Associates said the expanded share repurchase and
dividend scheme would keep investors satisfied for a while.
In the longer term, Apple needs another blockbuster gadget
to accelerate its momentum -- and win investors back for the
longer term. Cook tried on Tuesday to drum up enthusiasm around
the product pipeline by teasing that "some really great stuff"
-- potentially in new product categories -- was coming in the
fall and in 2014.
"They need something that breaks into new verticals, whether
it's TV or something that's wearable, that opens up a new
revenue stream," Epps said.
RESETTING THE SCALE
That remains among the most pertinent concerns for
Apple-watchers. Since Cook took over in 2011 from late
co-founder Steve Jobs, some investors have questioned whether
Apple can continue to up-end technology markets with new
revolutionary products that appeal to consumers in the absence
of the tech icon.
Cook has in the past year presided over three straight
quarters of missed revenue expectations before the
January-to-March period. The key product introduced during his
tenure is the smaller iPad mini, a response to tablets such as
Amazon.com Inc's Kindle that were making inroads on its
The public takes as a given that a new iPhone and new iPads
will come this year, along with refreshed Mac computers and iPod
music players. But the speculation is that Apple is also working
on a watch, a television and a radio service, among other
products in the pipeline.
Cook would not provide any more details on new products, no
surprise given the company's penchant for secrecy.
Some investors remain confident the Apple magic remains.
"The bar has been reset in terms of expectations and
guidance. They have done the right thing by issuing debt and
doing a large buyback," said Jason Jones, who runs tech hedge
fund firm HighStep Capital and confessed to being an Apple bull.
"The company will go through this quiet period for product
release and then, starting in the summer and for the remainder
of the year, product announcements will pick up and likely the
stock will react favorably to that."
While Apple is still growing -- no small achievement for a
company with sales well over $100 billion -- its pace of growth
has slowed as high-end smartphone adoption approaches saturation
and rivals flood the market with cheaper devices, which are
popular in high-growth developing countries like China and
Cook on Tuesday acknowledged that Samsung, which has
smartphones in all price categories, is its top competitor.
Apple also said it does sacrifice margin in the short-term, as
it did with the iPad mini, if executives believe a product has
"Apple is in the transition phase from growth to a value
company," said Tim Ghriskey, chief investment officer of Solaris
Asset Management. "Growth companies tend to put every penny back
in, but that is not the case with Apple here."