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Analysts: Apple must cater to Wall Street

Apple Inc. chief executive Tim Cook. Late on

Apple Inc. chief executive Tim Cook. Late on Jan. 23, Apple reported disappointing earnings, sending the stock lower Thursday. Credit: AP

Apple needs to come down off its perch and start making nice with Wall Street, analysts said Thursday as investors hammered the company's stock.

The sell-off put Apple a hairbreadth away from losing its status as the world's most valuable company. At Thursday's close it was worth $423 billion, just 1.6 percent more than No. 2, Exxon Mobil Corp.

Apple's decline apparently knocked it down as the largest single U.S. equity holding of the $150-billion New York State pension fund. As of Jan. 11, the fund held 3.1 million shares of Apple, which at close Thursday were worth $1.41 billion. As of Dec. 28, 2012, the fund held 15.7 million shares of Exxon Mobil, worth $1.43 billion at Thursday's close.

The plunge in Apple's stock was set off by its quarterly earnings report late Wednesday suggesting the company's nearly decade-long growth spurt is slowing drastically. The stock fell $63.51 to $450.50 Thursday. It last traded that low a year ago.

Analysts say Apple may not be able to win back the investors who bought the stock on the way up. They'll be chasing the next hot stock. But, analysts say, the company can make itself appealing to a new crop of investors who've never considered the stock, by doing what Wall Street wants and doling out more of its massive cash pile in the form of more generous dividends and stock buybacks.

To be sure, Apple products haven't lost their appeal. Apple CEO Tim Cook said the company couldn't make enough iPhones, iPads and iMacs in the holiday quarter to satisfy demand, so the appeal of Apple's products is intact.

The problem is rather that Apple hasn't launched a revolutionary new product since the iPad in 2010. The company reinvented consumer electronics three times in a decade with the launch of the iPod, iPhone and iPad, giving investors the expectation of perpetually zooming growth.

-- With Ted Phillips

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