Go Back   MacRumors Forums > Mac Community > Community Discussion > Politics, Religion, Social Issues

Reply
 
Thread Tools Search this Thread Display Modes
Old Apr 30, 2013, 09:34 AM   #1
MacRumors
macrumors bot
 
Join Date: Apr 2001
Apple Talking With Investors About $15-16 Billion Bond Offering




Following up on yesterday's initial filing from Apple addressing the company's efforts to issue a bond offering to raise cash in support of its stock buyback program, the company today filed a prospectus with the Securities and Exchange Commission outlining its general plans, which include six different chunks of debt with staggered maturities. The Wall Street Journal has more on Apple's prospectus and other details being revealed in one-on-one meetings with potential investors:
Quote:
The Apple deal comprises six chunks of debt, according to a regulatory filing from the company. Four tranches of fixed-rate debt are being offered in the form of three-, five-, 10- and 30-year paper. Rounding out the deal are two tranches of floating-rate debt, comprised of three- and five-year notes.
The Wall Street Journal indicates that Apple has not yet announced exactly how much money it intends to raise with today's offering, but that Apple is expected to offer "more than $10 billion" worth of bonds. Reuters cites a higher figure of $15-16 billion, which would rank the deal as one of the largest investment-grade bond offerings in history.

While Apple holds approximately $145 billion in cash and investments, roughly two-thirds of that money is currently held in foreign countries and would be subject to significant taxes if it were to be returned to the United States. As a result, Apple has elected to keep that money offshore and instead rely on relatively cheap debt to fund its capital return program, which consists primarily of a major stock buyback program and a quarterly dividend. Apple's current plan involves spending $100 billion to return capital to investors by the end of 2015.

Update: Reuters reports that the order book for Apple's bond offerings has now topped $40 billion, meaning that investors have offered bids for more than twice the amount of debt Apple is expected to issue. The oversubscription gives Apple flexibility in finalizing interest rates and amounts to be raised and indicates very strong interest in Apple's offerings.

Update 2: Bloomberg reports that Apple will sell a total of $17 billion worth of bonds.
Quote:
The company is offering $1 billion of three-year floating-rate notes, $1.5 billion of three-year fixed-rate notes, $2 billion of five-year floating-rate notes, $4 billion of five-year fixed-rate notes, $5.5 billion of 10-year fixed-rate notes and $3 billion of 30-year fixed-rate notes, according to market sources.
Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Apple Talking With Investors About $15-16 Billion Bond Offering
MacRumors is offline   0 Reply With Quote
Old Apr 30, 2013, 09:38 AM   #2
keysofanxiety
macrumors 65816
 
keysofanxiety's Avatar
 
Join Date: Nov 2011
Location: In a house that defies physics by being colder than absolute zero.
I don't know why, but the idea of Apple borrowing money to do this just doesn't sit right with me. That was one of the things Jobs was most proud of- no debts for the company. And let's face it, the stock buyback program is predominantly to artificially increase the stock value of AAPL -- unless there's something I'm missing (I don't profess to understand how this works, so forgive me if this comment is a bit naive!)
__________________
- "How can anyone do a spoken word version of a rap song?"
- "He found a way ... he found a way."
keysofanxiety is offline   16 Reply With Quote
Old Apr 30, 2013, 09:38 AM   #3
Rocketman
macrumors 603
 
Rocketman's Avatar
 
Join Date: Dec 2001
Location: Claremont, CA
The buzz is the 10 year notes will price under 2.4% rate.
__________________
Think Different-ly!
All 357 R or D House jobs bills over 4 years died in the D Senate, ordered by the D President. Buy a model rocket here: http://v-serv.com/usr/instaship-visual.htm Thanks.
Rocketman is offline   2 Reply With Quote
Old Apr 30, 2013, 09:41 AM   #4
abhishake
macrumors regular
 
Join Date: Jul 2005
Leverage is like cocaine - makes the good times better and makes the bad times worse.
__________________
Once you go Mac, you never go back.
abhishake is offline   12 Reply With Quote
Old Apr 30, 2013, 09:41 AM   #5
zin
macrumors 6502
 
Join Date: May 2010
Location: United Kingdom
How much would Apple's foreign reserves be subject to in the form of domestic taxes? Does anyone know an effective percentage?
zin is offline   1 Reply With Quote
Old Apr 30, 2013, 09:41 AM   #6
Mackan
macrumors 65816
 
Join Date: Sep 2007
The beginning of the end.
Mackan is offline   5 Reply With Quote
Old Apr 30, 2013, 09:41 AM   #7
PBG4 Dude
macrumors 65816
 
Join Date: Jul 2007
If a 30% fee is such a great deal for app developers, why is it such a bad deal for AAPL when they want their cash???
PBG4 Dude is online now   7 Reply With Quote
Old Apr 30, 2013, 09:42 AM   #8
Thunderhawks
macrumors 68020
 
Join Date: Feb 2009
Bond... shaken not stirred.
__________________
It's ready, when it's ready !
"Any fool can criticize, condemn and complain and most fools do." ó Benjamin Franklin
Thunderhawks is offline   8 Reply With Quote
Old Apr 30, 2013, 09:43 AM   #9
abhishake
macrumors regular
 
Join Date: Jul 2005
Quote:
Originally Posted by keysofanxiety View Post
I don't know why, but the idea of Apple borrowing money to do this just doesn't sit right with me. That was one of the things Jobs was most proud of- no debts for the company. And let's face it, the stock buyback program is predominantly to artificially increase the stock value of AAPL -- unless there's something I'm missing (I don't profess to understand how this works, so forgive me if this comment is a bit naive!)
What they're "banking" on (get it?) is the price of the stock to go up creating pretty much free money without doing anything. If the stock price drops after the stock repurchases, however, the leverage will cost them even more. This is showing how confident Apple is with AAPL.
__________________
Once you go Mac, you never go back.
abhishake is offline   10 Reply With Quote
Old Apr 30, 2013, 09:43 AM   #10
Squilly
macrumors 68020
 
Squilly's Avatar
 
Join Date: Nov 2012
Location: PA
2043 is scary to think about.
Quote:
which would rank the deal as one of the largest investment-grade bond offerings in history.
What is it with Apple and making history?
__________________
iPhone 6 16gb Space Gray Sprint
iPad Air 16gb with LTE AT&T (T-Mobile SIM)
Squilly is offline   1 Reply With Quote
Old Apr 30, 2013, 09:44 AM   #11
italynlprkn
macrumors newbie
 
Join Date: Jan 2013
Anyone saying that this is the beginning of the end, or that Jobs wouldn't have wanted it, should take a finance class.
italynlprkn is offline   15 Reply With Quote
Old Apr 30, 2013, 09:44 AM   #12
cubeeggs
macrumors member
 
Join Date: Dec 2009
30 years is a pretty long time for a tech company, isnít it? A lot will happen between now and 2043Ö
cubeeggs is offline   3 Reply With Quote
Old Apr 30, 2013, 09:46 AM   #13
Squilly
macrumors 68020
 
Squilly's Avatar
 
Join Date: Nov 2012
Location: PA
Quote:
Originally Posted by italynlprkn View Post
Anyone saying that this is the beginning of the end, or that Jobs wouldn't have wanted it, should take a finance class.
I wouldn't go that far, but they'd be better off with not having that much debt. Should pay it all off at once. Or within a smaller period.
__________________
iPhone 6 16gb Space Gray Sprint
iPad Air 16gb with LTE AT&T (T-Mobile SIM)
Squilly is offline   0 Reply With Quote
Old Apr 30, 2013, 09:47 AM   #14
Small White Car
macrumors G4
 
Small White Car's Avatar
 
Join Date: Aug 2006
Location: Washington DC
Quote:
Originally Posted by keysofanxiety View Post
And let's face it, the stock buyback program is predominantly to artificially increase the stock value of AAPL
This is your mistake. There's nothing "artificial" about the idea that restricting something increases its value.

That's a basic economic fact, not an illusion.
Small White Car is online now   8 Reply With Quote
Old Apr 30, 2013, 09:47 AM   #15
keysofanxiety
macrumors 65816
 
keysofanxiety's Avatar
 
Join Date: Nov 2011
Location: In a house that defies physics by being colder than absolute zero.
Quote:
Originally Posted by abhishake View Post
What they're "banking" on (get it?) is the price of the stock to go up creating pretty much free money without doing anything. If the stock price drops after the stock repurchases, however, the leverage will cost them even more. This is showing how confident Apple is with AAPL.
Ah, right. That makes a little more sense.

Again, at the risk of annoying you with an obvious question: why does Apple even need to do this in the first place? Wouldn't it be better to simply stay out of debt, push money into innovation and continue to bring out great products? The stock goes up and down; but Apple's declining stock isn't really in tandem with their profits or anything like that.

TL;DR: Why is it worth the risk? If Apple continue to be profitable as they have, won't the stock go back up again?
__________________
- "How can anyone do a spoken word version of a rap song?"
- "He found a way ... he found a way."
keysofanxiety is offline   2 Reply With Quote
Old Apr 30, 2013, 09:49 AM   #16
Rocketman
macrumors 603
 
Rocketman's Avatar
 
Join Date: Dec 2001
Location: Claremont, CA
Quote:
Originally Posted by zin View Post
How much would Apple's foreign reserves be subject to in the form of domestic taxes? Does anyone know an effective percentage?
In the ballpark of 39%.
__________________
Think Different-ly!
All 357 R or D House jobs bills over 4 years died in the D Senate, ordered by the D President. Buy a model rocket here: http://v-serv.com/usr/instaship-visual.htm Thanks.
Rocketman is offline   2 Reply With Quote
Old Apr 30, 2013, 09:50 AM   #17
JAT
macrumors 603
 
Join Date: Dec 2001
Location: Mpls, MN
Quote:
Originally Posted by zin View Post
How much would Apple's foreign reserves be subject to in the form of domestic taxes? Does anyone know an effective percentage?
35% minus any foreign income tax already paid, most likely a direct credit rather than any sort of deduction. There could be other reductions, as well, I am not a tax expert, nor do I know Apple's specifics.

Could also be State tax.
__________________
-- Spiky
JAT is offline   2 Reply With Quote
Old Apr 30, 2013, 09:50 AM   #18
Mackan
macrumors 65816
 
Join Date: Sep 2007
Everything that has a beginning has an end.
Mackan is offline   0 Reply With Quote
Old Apr 30, 2013, 09:53 AM   #19
cire
macrumors 6502
 
Join Date: Jun 2007
I wonder if these bonds can be used as a mechanism to effectively repatriate the funds without taxation. Fr example, if they are purchased by Apple's foreign entities or otherwise swapped Apple may get to us the funds in the US without paying the taxes until an amnesty or tax change occurs.
cire is offline   2 Reply With Quote
Old Apr 30, 2013, 09:56 AM   #20
genovelle
macrumors 6502
 
Join Date: May 2008
Quote:
Originally Posted by PBG4 Dude View Post
If a 30% fee is such a great deal for app developers, why is it such a bad deal for AAPL when they want their cash???
Because it includes the cost of building out facilities, handling the sales, and service as well as marketing the store. Their fee is far less than it would cost for developers to obtain the same exposure. On the other hand it is up to the developer to set pricing and factor in all cost involved. They are even supplying many of the tools for development and testing as well. They can always do a web app like Apple provided in the beginning and sell on their own site and pay nothing to apple. Do their own promotion and support. If they were developing for xbox they would pay a lot more, if they could get on the platform to begin with.
genovelle is offline   0 Reply With Quote
Old Apr 30, 2013, 09:56 AM   #21
Small White Car
macrumors G4
 
Small White Car's Avatar
 
Join Date: Aug 2006
Location: Washington DC
Quote:
Originally Posted by keysofanxiety View Post
Why is it worth the risk? If Apple continue to be profitable as they have, won't the stock go back up again?
Because if they do nothing then the stock rising only benefits stockholders, not the company.

By basically becoming a stockholder, Apple gets the advantage of the stock going up, just like everyone else. (Instead of just being a spectator.) It's what Warren Buffet said...if you think you can buy $1 for 95 cents, why wouldn't you? Right now that's what Apple feels like it's doing.

Not only will Apple get financial benefits if things go well, it's also a HUGE show a faith to other investors that the company wants to be in the same boat as everyone else. You'd feel safer in a ship that the construction manager is riding in too, wouldn't you?
Small White Car is online now   0 Reply With Quote
Old Apr 30, 2013, 09:57 AM   #22
Shrink
macrumors Demi-God
 
Shrink's Avatar
 
Join Date: Feb 2011
Location: New England, USA
Quote:
Originally Posted by Squilly View Post
I wouldn't go that far, but they'd be better off with not having that much debt. Should pay it all off at once. Or within a smaller period.
Your strongly declarative statements indicate an in-depth knowledge of corporate finance.

With that in depth-knowledge, could you expand on your comment and explain your disagreement with Apple's actions.

Thanks...
__________________
Two things are infinite, the universe and human stupidity; and I'm not sure about the universe. -- Albert Einstein
Shrink is offline   1 Reply With Quote
Old Apr 30, 2013, 09:57 AM   #23
Muscle Master
macrumors 6502
 
Join Date: Oct 2010
Location: Philadelphia
Why can't they support the American economy and pay.. ALL they taxes. bring the cash back to the USA
__________________
Apple Macbook Pro Retina '13 (Late 2012)
OS X Mountain Lion / Intel Core i5-3210M @ 3.1GHz / 8GB DDR3 1600MHz / Retina Display @ 2560x1600 / 128GB Solid State Drive | Apple iPhone 5S
Muscle Master is offline   9 Reply With Quote
Old Apr 30, 2013, 09:58 AM   #24
mostlydave
macrumors member
 
Join Date: Aug 2011
It makes me sick that one of America's most valuable companies is allowed to pull this crap instead of just paying taxes on earned income.
mostlydave is offline   12 Reply With Quote
Old Apr 30, 2013, 09:59 AM   #25
Nungster
macrumors regular
 
Join Date: Oct 2011
Quote:
Originally Posted by keysofanxiety View Post
I don't know why, but the idea of Apple borrowing money to do this just doesn't sit right with me. That was one of the things Jobs was most proud of- no debts for the company. And let's face it, the stock buyback program is predominantly to artificially increase the stock value of AAPL -- unless there's something I'm missing (I don't profess to understand how this works, so forgive me if this comment is a bit naive!)
They are borrowing the money so they do not have to repatriate the overseas money. The bond yield is not bad either, and in the end it would have been the wiser choice for them to pay ~2.9% over the three years buying back a stock that has the potential to go back up to $700+

No one knows better about Apples future products and innovations than they do.

Think about it.
Nungster is offline   0 Reply With Quote


Reply
MacRumors Forums > Mac Community > Community Discussion > Politics, Religion, Social Issues

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Similar Threads
thread Thread Starter Forum Replies Last Post
Apple Reports Strongest Ever Quarterly Earnings: $13.1 Billion Profit on $57.6 Billion in Revenue in Q1 2014 MacRumors MacRumors.com News Discussion 409 Feb 1, 2014 06:43 AM
Apple Announces $13 Billion Payout to Developers, 60 Billion Cumulative App Downloads MacRumors iOS Blog Discussion 4 Oct 22, 2013 03:43 PM
Apple's App Store Reaches 50 Billion Downloads, Now on Pace for 20 Billion Apps Per Year MacRumors MacRumors.com News Discussion 80 May 16, 2013 11:42 AM
Apple Announces 40 Billion App Store Downloads, Nearly 20 Billion in 2012 MacRumors MacRumors.com News Discussion 100 Jan 10, 2013 11:17 AM
Apple Reports Results for Q3 2012: $8.8 Billion Profit on $35 Billion in Revenue MacRumors MacRumors.com News Discussion 274 Jul 27, 2012 08:06 PM

Forum Jump

All times are GMT -5. The time now is 09:27 PM.

Mac Rumors | Mac | iPhone | iPhone Game Reviews | iPhone Apps

Mobile Version | Fixed | Fluid | Fluid HD
Copyright 2002-2013, MacRumors.com, LLC