Apple Inc. (NASDAQ:AAPL) recently signed a deal with China Mobile Ltd (NYSE:CHL) (HKG:941) that will expose Apple Inc. (NASDAQ:AAPL) to more than 763 million potential customers and generate billions of dollars in additional revenues for the tech giant. But the Cupertino-based company has started showing signs of a business entering its maturity phase, says Pim Keulen. In 2013, the stock plunged to as low as $392. It rose from the bottom mainly due to a share buyback program, dividend hike, Carl Icahn’s consistent pressure on the company, and of course, a deal with China Mobile Ltd (NYSE:CHL) (HKG:941).
So, what are the signs that suggest that Apple Inc. (NASDAQ:AAPL) has entered the maturity phase? It’s a natural development which takes a lot of time. Here they are:
Apple’s business cycle
The massive growth rate Apple Inc. (NASDAQ:AAPL) experienced over the past few years may not be sustained for decades. Its modest stock performance indicates that the tech giant is leaving the growth phase and entering into the maturity phase. The increased focus of shareholders on stock buybacks and dividend hikes is another indication. Carl Icahn has been pressing Apple Inc. (NASDAQ:AAPL) for a whopping $150 billion stock buyback.
Apple’s revenue growth
Apple Inc. (NASDAQ:AAPL)’s revenues continue to increase, rising 9.2% from FY2012 to FY2013. And it should increase again in 2014 given its recent deal with China Mobile Ltd. (NYSE:CHL) (HKG:941), which can add more than $10 billion to its sales. But Keulen says revenue growth is not the right indicator of whether a company is in the growth phase or maturity phase. Sometimes companies realize revenue growth even while entering the decline phase.
Investors argue that Apple Inc. (NASDAQ:AAPL) is likely to launch some mind-boggling products in 2014 such as iPhone 6, iTV, a bigger iPad and iWatch. But increasing market share and revenue through differentiation is a sign of the maturity phase, where a company transitions to a relatively “boring” dividend stock
Apple’s declining market share
Apple Inc. (NASDAQ:AAPL)’s share in the global smartphone market has been declining. The company had a 14.2% share in the smartphone market in September 2012, which declined to 12.1% in September 2013. Though Apple Inc (NASDAQ:AAPL)’s shipments increased, the market and its rivals grew at even faster pace.
Apple Inc. (NASDAQ:AAPL) has increased dividend payout by 15%, and has promised to spend $60 billion to buy back its own shares by 2015 to soothe investors who have been concerned about a declining stock price. Discussions around the company’s stock buyback and dividend increase are likely to heat up next year. Tim Cook has stated that he will make an important announcement about dividends in January 2014. Investors expect another 10-20% increase in dividend payments.
These facts point to only one direction: Apple Inc. (NASDAQ:AAPL) is slowly entering a maturity phase, and is likely to become a dividend stock soon.
Apple Inc. (NASDAQ:AAPL) shares declined 0.66% to $560.17 at 11:34 AM EST.