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No wonder Carl Icahn recently stopped pestering Apple Inc. to dish out more of its idle billions to shareholders. The tech juggernaut is turning itself into a value investor's dream with its latest muscular quarterly earnings, a healthy dividend hike, an enlarged share buyback plan and a seven-for-one stock split that will make it more appealing to smaller punters.

Apple chief executive Tim Cook delivered more than Mr. Icahn, the billionaire convert to investor activism, could have hoped, including a pledge to keep raising the dividend year after year, much like a nice safe utility. As icing on the shareholders' cake, the company's huge stock split, its first in nearly a decade, could also pave the way for its eventual admission to the exclusive club of 30 stocks that make up the Dow Jones Industrial Average. What could scream value more than that?

This is the clearest picture yet of where Mr. Cook wants to take the company. He's delivering an Apple that investors are sure to embrace. But it's an Apple whose future grows cloudier as the tablet and smartphone markets that the company fostered become increasingly commoditized and aggressive competitors like Samsung undercut its prices.

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Steve Jobs had nothing against high stock valuations. But the creator of the dazzling, ground-breaking Apple had famously little interest in meeting shareholder demands for a bigger share of its vast cash hoard – which still sits at $150-billion (U.S.). He preferred instead to focus on the creation and marketing of awe-inspiring products capable of disrupting existing markets and destroying the dominance of complacent leaders. Which is what he did to the likes of Dell in computers, BlackBerry and others in smart phones and the entire music distribution business.

It would be wrong to suggest Apple has stopped plowing billions into product development on Mr. Cook's watch. But it's no easy task competing with a legend. And the plain fact is that Apple has done little more over the past four years than produce a string of updates and sequels to its greatest hits. That they still rake in a torrent of cash is a tribute to their iconic status, widespread popularity and the most efficient supply network and retail operation in the business.

Revenue inched up 5 per cent to $45.6-billion in the second quarter from a year earlier, while profit climbed to $10.2-billion or $11.62 a share from $9.5-billion or $10.62. Sales, earnings and gross margins all crushed estimates. The big driver remained iPhone sales, including big gains in emerging markets. But this growth can't be sustained amid fierce competition, particularly at the higher, more profitable end of the business. In the absence of breakthrough products, the battle hinges on who can deliver the most sought after devices at the best price and Apple has never been an effective low-cost competitor.

Mr. Cook would undoubtedly love to quiet the critics who regard him as a less than inspiring number-cruncher who still thinks and manages like the supply-chain and inventory specialist he used to be.

Instead, he may have to be content with a different legacy – as the CEO who turned one of the world's great growth stocks into one of the best value propositions going.

There's nothing wrong with dishing out more of the spoils from years of remarkable earnings. It's just not the Apple we have come to know and love and occasionally hate in years past.

Follow Brian Milner on Twitter at @BMilnerGlobe.

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About the Author
Senior Economics Writer and Global Markets Columnist

Brian Milner is a senior economics writer and global markets columnist. In a long career at The Globe and Mail, he has covered diverse business beats, including international trade, the automotive industry, media, debt markets, banking and the business side of sports. More


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