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Business News/ Companies / Apple soars to record amid optimism about new batch of products
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Apple soars to record amid optimism about new batch of products

Apple rose 1.4% to $100.53, topping the split-adjusted record of $100.30 reached in 2012, just before the iPhone 5 went on sale

The stock’s rise shows investors are buying into the strategy outlined by CEO Tim Cook, who has been prodded to introduce bigger iPhones, give more money back to stockholders and introduce new devices. Photo: AFPPremium
The stock’s rise shows investors are buying into the strategy outlined by CEO Tim Cook, who has been prodded to introduce bigger iPhones, give more money back to stockholders and introduce new devices. Photo: AFP

San Francisco: Apple Inc.’s stock closed at an all-time high, surpassing a 2012 record as investors look ahead to new products such as bigger-screen iPhones and a wristwatch-like device that may jump-start revenue growth.

Apple rose 1.4% to $100.53, topping the split-adjusted record of $100.30 reached on 19 September 2012, just before the iPhone 5 went on sale. The shares have gained 25% this year.

After rising more than sevenfold following the 2007 debut of its smartphone, Apple stock lost a third of its value in the year after the iPhone 5’s release on concerns that the company was running out of hit product ideas without co-founder Steve Jobs. The tenor has changed, with analysts estimating record sales for the next batch of iPhones, set to be released later this year.

In June, people familiar with the plans said Apple planned to start mass production on two smartphones with larger screens, a response to devices from rivals such as Samsung Electronics Co. and HTC Corp.

The stock’s rise shows investors are buying into the strategy outlined by chief executive officer (CEO) Tim Cook, who has been prodded to introduce bigger iPhones, give more money back to stockholders and introduce new devices.

Those shareholders are now getting what they want. In addition to the larger iPhones, Cook has vowed that Apple will enter a new product category this year. The company is said to be developing a smartwatch, and Morgan Stanley’s Katy Huberty has said Apple may sell as many as 60 million of the new wearable device in its first year on the market, adding up to $9 billion in revenue for fiscal 2015. Apple hasn’t commented on the prospect of larger iPhones or a possible smartwatch.

Spending cash

Cook also has been more open than Jobs was to using the company’s cash hoard to return money to shareholders. Apple is in the midst of a programme to give back $130 billion through buybacks and dividends. He’s also been more active in acquisitions, including spending $3 billion to buy Beats Electronics Llc, the company’s biggest-ever purchase.

Apple’s stock price makes it the world’s most valuable company—more than 30% bigger than Exxon Mobil Corp., the second-largest by market capitalization.

The company also appears to be settled in to an era of modest earnings growth after last year reporting its first decline in a decade. On 22 July, Apple reported its second straight profit gain as a rise in iPhone and Mac sales helped make up for a drop in iPad demand. Net income rose 12% to $7.75 billion, its biggest gain since 2012.

Meanwhile, Samsung, Apple’s biggest competitor, has seen its stock decline 8.6% this year. Earnings at the world’s largest maker of mobile phones have fallen for three consecutive quarters, pinched between competition with Apple for customers of high-end smartphones and Chinese manufacturers such as Xiaomi Corp. and Lenovo Group Ltd for less-expensive models. Bloomberg

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Published: 20 Aug 2014, 09:55 AM IST
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