Apple's cash plan takes heat off Tim Cook, buys him time

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 Inc'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.

Apple shares fell 1.2 percent to $401.24 in early trade on Wednesday, continuing a 43 percent slide in the stock since mid-September.

At least 17 brokerages lowered their price targets on the stock following the quarterly results, including JPMorgan, which cut its target by 25 percent.

Apple's earnings growth trajectory has come to earth in the last year. After posting average annual earnings per share growth of 62 percent over the past five years, its profit is now forecast to grow at just 4.5 percent a year for the next decade. For this year, earnings per share are expected to fall 4.4 percent, according to Thomson Reuters StarMine data.

ADMITTING A CHANGE 

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 everyone's delight.

But on Tuesday, Cook made the rare admission to analysts on a conference call that Apple's growth has slowed and margins have decreased.

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 Epps said.

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, slower-growth reality.

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.