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

Wed Apr 24, 2013 3:45pm EDT
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By Poornima Gupta and Ben Berkowitz

(Reuters) - 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 biggest 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 were up 0.2 percent to $406.96 in afternoon trading on Wednesday, reversing direction after falling about 1 percent in early trading. The stock has seen a 43 percent slide since mid-September.

With Apple planning to borrow money to reward shareholders - one way to circumvent repatriating its vast overseas cash for that purpose - it could go from having zero debt to a company that rivals major global banks such as Citigroup in issuing bonds.

The company received an AA+ rating from Standard & Poor's, missing the top rating due to earnings growth uncertainty.

Following the earnings, at least 17 brokerages lowered their price targets on the stock, including JPMorgan, which cut its target by 25 percent.   Continued...

Apple CEO Tim Cook speaks to the audience during an Apple event in San Jose, California October 23, 2012. REUTERS/Robert Galbraith