Apple Talking With Investors About $15-16 Billion Bond Offering

[IJ Reilly]

Seems like splitting the stock was a bit premature...

Or a reverse-split could accomplish the same thing at no cost whatsoever.

As always, your reasoning leaves mine drowning in a puddle of warm spit.



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True, but on the other hand, the board has not stipulated a specific schedule either. If they think that the stock is under valued, they can accelarate the buy back program.

Before this bond sale on Tuesday, there were some speculation that Apple may do this over many rounds over a period of time. That made sense, since like what you also said, they do not need the money right away. In fact, they do not need any money right now even if they want to complete a significant chunk of the buy back. They have enough in post tax dollars and enough money is coming in every quarter.

But they chose to do it in one round. That may signal something about their intent on the buy back schedule. Apple seems to do things in non traditional manner. So I would not be surprised if they announce in a few months that they have completed 50% of their buy back target. That may be wishful thinking on my part since that will make me very happy.

I'm not entirely certain, but I believe the SEC rules on stock buybacks prohibit the company from announcing any specific plans. I think this is why we see such broad-brush descriptions. The timing of the bond sale will probably tell us more than we'd normally know about the scheduling of the buybacks.

 

[Rocketman]

The bond sale was completed yesterday for $17B. It was oversubscribed by about 3x. The breakdown was about:

http://www.reuters.com/article/2013/04/30/apple-debt-idUSL2N0DH19720130430

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.

Assuming an average interest cost across durations of about 2.0%, this is about $28.3m a month for $17B up front.

Apple puts money to work with these results:

2012
Return on average assets 28.54%
Return on average equity 42.84%

https://www.google.com/finance?q=NASDAQ:AAPL

Rocketman

 

[gsugolfer]

Actually, if the US wants to stop this, then Congress can pass a law that taxes the funds raised by the bonds as de facto income. Seems to me that is what should be done in cases like this.... YT

The top 20% of US households hold over 80% of stocks and mutual funds. This maneuver by Apple will only benefit rich people to the disadvantage of poor people.

That is absurd. Should you be taxed on the loan that you take out to buy/build a house? It's a cash inflow, after all.

That's basically what you're saying here.

 

[HelveticaRoman]

So the only thing Apple cannot afford to buy is their own stock?

 

[VulchR]

That is absurd. Should you be taxed on the loan that you take out to buy/build a house? It's a cash inflow, after all.

That's basically what you're saying here.

When I am rich enough to successfully borrow $17B for a home, then I am rich enough to be taxed on it. Seriously, though, Apple is using this as a device to avoid taxes. Congress should close that loophole as quick as you can say 'budget cut'.