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Apple doles out cash, Facebook beat underwhelms

Thursday, April 24, 2014 - 02:40

Apr 23 - Apple wows the street with a 7-for-1 stock split that overshadowed a plunge in iPad sales. Meanwhile, Facebook easily beat forecasts but a slowing growth rate for active sign ups could be a problem for the high-flying stock. Conway G. Gittens reports.

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Apple beat sales and earnings forecast for the quarter but the world's most valuable company is getting attention for something else. It plans to give back over $130 billion in cash to shareholders. It's bumping up dividends to $3.29 per share, bulking up its share repurchase to $90 billion, and announcing a 7-for-1 stock split. Shares of Apple quickly shot higher on the news. And immediately won praise from billionaire investor Carl Ichan, who earlier waged a war of words to persuade Apple to pass the wealth around. But there also was a dig at management in his Tweet: "Believe we'll also be happy when we see new products." Others share that concern. Some believe Apple should be using its over hundred-billion-dollar cash stockpile to buy innovative companies or at least return to the innovation, which brought the world the iPod, the iPhone, and the iPad. But others are patient, saying Apple has proven - it may not always be the first to launch a product, but it quickly rises to the top. Jan Dawson, founder and chief analyst at Jackdaw Research is in that camp. JAN DAWSON, FOUNDER AND CHIEF ANALYST, JACKDAW RESEARCH (ENGLISH) SAYING: "That's Apple's modus operandi - is it doesn't necessarily jump in to be first in a new market. It tends to reinvent an existing category in a way that makes it markedly better. If you look at the smartwatch space right now: yes, there are other entrants out there, but the screens are bad, the battery life is bad, the functionality is bad, the software is kludgey. There are lots of problems that Apple can theoretically come up and solve when the time is right." But the clock is ticking on a new product. Its last star- the iPad is fading - with sales falling a much greater-than-expected 16 percent. Facebook has taken a different approach - throwing billions of dollars to buy start up after start up. Profits came in better-than-expected. Revenues topped forecasts coming in at $2-1/2 billion, with more than half of that coming straight from mobile advertising. Advertisers are willing to pay up to get access to the social network's 1.28 billion monthly active users, where mobile sign-ups are growing at a faster rate than desk-top. But the numbers don't tell the whole picture. JAN DAWSON, FOUNDER AND CHIEF ANALYST, JACKDAW RESEARCH (ENGLISH) SAYING: "The problem for Facebook is that user growth has actually started to slow down, so every quarter for the last three quarters now, the number of new users has gone down from the previous quarter, so that growth is slowing the number of users. Engagement is still increasing, so more monthly users are becoming daily users and that's a good thing, but in Asia in fact that's lagging." And that could be a problem for the stock with investors looking for even faster subscriber growth.