or Connect
AppleInsider › Forums › Investors › AAPL Investors › Apple preparing $17B bond sale to help fund massive share buyback
New Posts  All Forums:Forum Nav:

Apple preparing $17B bond sale to help fund massive share buyback

post #1 of 36
Thread Starter 
A year after it turned to the bond markets to fund its capital repurchase program, Apple is planning to do the same yet again, with a sale price that would reportedly be the second highest in corporate history.

Bond


Apple has another massive $17 billion bond sale in the works that would target both the U.S. and foreign markets, according to the Financial Times. That cash will help the company increase its share buyback efforts, which were announced last week to be surging to $90 billion through the end of 2015.

Apple Corporate Comptroller Luca Maestri said last week that his company would likely raise "an amount of term debt financing similar to what we used in 2013." It was last April that Apple announced a six-part $17 billion bond offering that at the time was the largest in corporate history.

That bond sale has since been surpassed by Verizon's sale of $49 billion bonds in 2013. But if Apple were to exceed its sum from last year, it would rank as the second-highest bond sale in history.
Apple has taken on debt to help fund its share buyback program, allowing it to keep a strong domestic cash position without repatriating (and paying high taxes) on overseas money.
Though Apple has some $150 billion in cash, almost all of that -- $130 billion --?is held overseas. Executives from the company have signaled numerous times, including last week, that they have no plans to repatriate the overseas cash, citing high tax rates for bringing the money to the U.S.

Apple would not only need to buy back shares with domestic cash, but company executives also plainly stated that they would like to stay with a liquid cash position to allow flexibility for options like research and development investments, as well as acquisitions.

For its foreign debt sale, Apple is likely to target the eurozone for low interest rates, according to the Times. This would allow the company to diversify its base, and also help prevent saturation of the U.S. debt market with such a large sale.
post #2 of 36
So, if Apple sold it's debt in the "eurozone" could it bring those funds back to the US for share buybacks and dividends (since it isn't foreign profits) but then pay back the debts with funds already held in the "eurozone?" If that was legal it seems like a pretty easy way to get around repatriation tax requirements. I'm guessing that must not be kosher, but I don't understand why not.
post #3 of 36
Simple fact is the 30 % repatriation rate is stupid.. other countries have it at under 10%.. even Canada is under 10% now.. We COMPETE against these countries for this cash flow.. Yet, our politicians are basically telling our American companies that they should do international business and to keep the cash made away from the US market.

Stupid.. both sides of the isle need to be kicked to the curb..
post #4 of 36

Greg in Prague: I don't think that will work. I'm not an accountant, etc but the debt and the eurozone cash are held by different legal entities.

post #5 of 36
"Both sides?" Is that right? Be a pal and show me where i can research the GOPs efforts to levy massive corporate taxes. In fact, show me where i can learn about any GOP effort to levy massive taxes, and in return I'll show you the unicorn photos i took in malibu last week.

"Both sides..." You'd be better off just blaming the "gubbermint" than trying to ascribe some blame for DNC policy on "both sides" like some partisan sycophant. One party is renowned for their willingness to tax the snot out of the working class to fund the purchase of the votes from the non working class, and it isnt "both sides".
post #6 of 36
greginprague
I was thinking the same thing nut willliamh may be right.
I'm sure this will be discussed more in future articles.


In answer to the other set of comments, it is quite clear that no politician in the US is willing to sacrifice their political career over tax reform. The special interests and lobby groups would ensure that the candidate would have no chance of getting re-elected since they would lose all their funding.
post #7 of 36
Quote:
Originally Posted by echosonic View Post

"Both sides?" Is that right? Be a pal and show me where i can research the GOPs efforts to levy massive corporate taxes. In fact, show me where i can learn about any GOP effort to levy massive taxes, and in return I'll show you the unicorn photos i took in malibu last week.

"Both sides..." You'd be better off just blaming the "gubbermint" than trying to ascribe some blame for DNC policy on "both sides" like some partisan sycophant. One party is renowned for their willingness to tax the snot out of the working class to fund the purchase of the votes from the non working class, and it isnt "both sides".


I see you have mastered all of your 'talking points' this morning. 

post #8 of 36
Quote:
Originally Posted by echosonic View Post

"Both sides?" Is that right? 

Well both sides are equally opposed to a tax repatriation holiday. The last time they approved one, in 2004, it was supposed to create jobs, but it didn't. It only lined the pockets of corporate shareholders. A tax holiday also encourages corporations to continue to hold money offshore in expectation that there will be another tax holiday.

 

But corporations don't really need a tax holiday to repatriate overseas money. There are perfectly legal ways of doing it tax free. Two well known schemes are called "Killer B" and "Deadly D" after their section namesakes in the federal tax code.

Life is too short to drink bad coffee.

Reply

Life is too short to drink bad coffee.

Reply
post #9 of 36
Apple up 3% today, Microsoft also. Google, Amazon, Netflix, Facebook are down. Seems tech money is flowing out of overvalued, momentum stocks back into Apple and Microsoft.
post #10 of 36
It's a good time to be holding AAPL.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #11 of 36

Lending money to gamble with shares?

Sounds like a good idea.

 

In the mean time, Apple could have had its own satellite communication network accessible for iPhones even on the North and South Pole.  

That will burn money, but not even close to the amount they burn now, and will instead return real value to the customers.

 

I think its official, Apple ran out of ideas.

post #12 of 36
If I was Apple why would I bring back money here to the USA at 30% tax so they can just squander it and waste it. Apple can do more with the 30% to promote real world innovation then the government just throwing it to their buddies on a contract.
post #13 of 36
Quote:
Originally Posted by knowitall View Post
 

Lending money to gamble with shares?

Sounds like a good idea.

 

In the mean time, Apple could have had its own satellite communication network accessible for iPhones even on the North and South Pole.  

That will burn money, but not even close to the amount they burn now, and will instead return real value to the customers.

 

I think its official, Apple ran out of ideas.


Actually simple math shows Apple is taking a good approach.  The savings on the dividend will easily pay for the interest while pushing the EPS higher.  All remaining Apple shareholders own those earnings in effect. 

post #14 of 36
Quote:
Originally Posted by Rogifan View Post

Apple up 3% today, Microsoft also. Google, Amazon, Netflix, Facebook are down. Seems tech money is flowing out of overvalued, momentum stocks back into Apple and Microsoft.

 

Well if you are going to invest, I would say invest in tangible stuff when it comes to tech (that's my view).

 

The thing that held Microsoft down was Ballmer. If MS gets back to being a software company and really basically rides with Apple, that's good news for both companies.

 

Google is the most overvalued stock out there…and then Amazon.

post #15 of 36
Quote:
Originally Posted by BeltsBear View Post
 


Actually simple math shows Apple is taking a good approach.  The savings on the dividend will easily pay for the interest while pushing the EPS higher.  All remaining Apple shareholders own those earnings in effect. 

Could be, and in 5 years time?

I'll consider it when I need a financial institution. 

post #16 of 36
Quote:
Originally Posted by knowitall View Post
 

Lending money to gamble with shares?

Sounds like a good idea.

 

In the mean time, Apple could have had its own satellite communication network accessible for iPhones even on the North and South Pole.  

That will burn money, but not even close to the amount they burn now, and will instead return real value to the customers.

 

I think its official, Apple ran out of ideas.

Apple has plenty of ideas.  They just don't need $150 B to implement them.

 

Watch Apple do both.

 

Thompson

post #17 of 36
Quote:
Originally Posted by GregInPrague View Post

So, if Apple sold it's debt in the "eurozone" could it bring those funds back to the US for share buybacks and dividends (since it isn't foreign profits) but then pay back the debts with funds already held in the "eurozone?" If that was legal it seems like a pretty easy way to get around repatriation tax requirements. I'm guessing that must not be kosher, but I don't understand why not.

Debt is not earnings, so I don't see how anyone can tax it.  Would Apple get a deduction for each taxed dollar as they paid it back in Europe (and not just the interest)?  

 

Thompson

post #18 of 36

Perfectly wise strategy. Some amount of additional debt is an excellent thing, given the tax deductibility of interest payments (combined with the still historically low borrowing rates for highly-rated companies like Apple).

 

Icahn's suggestion of $150B in additional debt was -- IMHO -- stupid, but a couple of tens of billions (on top of what will be $18B + $17B so far) won't hurt. This means that Apple has some more room to run with additional repurchases, if/as needed. The market clearly likes it!

 

The huge deal will be in the Fall, with the expected new product and new product category intros. If that's seen as a home run -- as I totally expect it will be -- watch the stock take off..... 

post #19 of 36
Quote:
Originally Posted by knowitall View Post
 

Could be, and in 5 years time?

I'll consider it when I need a financial institution. 

Then sell, and check back in 5 years.

 

Stop whining.

post #20 of 36
Quote:
Originally Posted by echosonic View Post

"Both sides?" Is that right? Be a pal and show me where i can research the GOPs efforts to levy massive corporate taxes. In fact, show me where i can learn about any GOP effort to levy massive taxes, and in return I'll show you the unicorn photos i took in malibu last week.

"Both sides..." You'd be better off just blaming the "gubbermint" than trying to ascribe some blame for DNC policy on "both sides" like some partisan sycophant. One party is renowned for their willingness to tax the snot out of the working class to fund the purchase of the votes from the non working class, and it isnt "both sides".

 

 

I agree 100%, however, the GOP continues to fail in convincing the people with solid policies to fix numerous problems. Unfortunately, when you have a nation of fools who elect fools, there is no real fix for stupid. 

post #21 of 36
Quote:
Originally Posted by Spartan View Post

Well if you are going to invest, I would say invest in tangible stuff when it comes to tech (that's my view).

The thing that held Microsoft down was Ballmer. If MS gets back to being a software company and really basically rides with Apple, that's good news for both companies.

Google is the most overvalued stock out there…and then Amazon.
Amazing seeing all these tech stocks way down today and then Apple and Microsoft way up. Amazon is down another 4% today which means its close to being down 30% YTD. Netflix is down 5%, Facebook 3.5%. Perhaps we're finally starting to see the tech bubble pop and a flight to quality/value. Both Apple and Microsoft pay dividends and both are very good at printing money. 1smile.gif
post #22 of 36
Quote:
Originally Posted by knowitall View Post
 

Lending money to gamble with shares?

Sounds like a good idea.

 

In the mean time, Apple could have had its own satellite communication network accessible for iPhones even on the North and South Pole.  

That will burn money, but not even close to the amount they burn now, and will instead return real value to the customers.

 

I think its official, Apple ran out of ideas.

 

average stock price of buyback $485

stock price today $590

 

Apple has saved shareholders over $10,000,000,000 in share appreciation.

GTFO you troll.  You don't know anything about capital allocation so you should zip it.

 

Apple thinks the shares are undervalued and thats why they authorized purchases of $90,000,000,000.  Apple knows EXACTLY what they will be releasing the next 2 years.  Do you?  Then STFU.

post #23 of 36

Looks like apple is on a good run.

post #24 of 36
Quote:
Originally Posted by SolipsismX View Post

It's a good time to be holding AAPL.

Yeah.... as of the time of writing, today:

 

GOOG  –2.28%

LNKD   –9.03%

TSLA   –4.05%

TWTR  –4.52%

AMZN  –4.38%

FB       –4.26%

NFLX   –6.24%

AAPL   +2.08%

post #25 of 36
It seems to me that this type of capital reallocation is almost a type of insider trading... in a good way.
Assuming that the CEO/board are intending to do what their fiduciary duties require, can't we also assume that the CEO/board know something that the market doesn't? Or is my thinking off base?
post #26 of 36
Issuing bonds at probably >2% to 5% seems a great idea if you thing your company is going to do well in the future. Retiring stock that is currently yielding 2.3% and about to rise is an immediate offsetting savings. From a tax perspective, I am no accountant, but I believe the dividends come out of profits taxed at corporate rates whereas bond interest is an expense and therefore reduced taxable profits and therefore tax. Seems a good deal all round to me to deliver value to the shareholders.
post #27 of 36
Quote:
Originally Posted by sog35 View Post

average stock price of buyback $485
stock price today $590

Apple has saved shareholders over $10,000,000,000 in share appreciation.
GTFO you troll.  You don't know anything about capital allocation so you should zip it.

Apple thinks the shares are undervalued and thats why they authorized purchases of $90,000,000,000.  Apple knows EXACTLY what they will be releasing the next 2 years.  Do you?  Then STFU.

I do know something about good manners, you clearly don't.
That could explain your focus on money.
post #28 of 36
Quote:
Originally Posted by anantksundaram View Post

Yeah.... as of the time of writing, today:

GOOG  –2.28%
LNKD   –9.03%
TSLA   –4.05%
TWTR  –4.52%
AMZN  –4.38%
FB       –4.26%
NFLX   –6.24%
AAPL   +2.08%

Wait a few days when someone sneezes ...
post #29 of 36
Quote:
Originally Posted by knowitall View Post


I do know something about good manners, you clearly don't.
That could explain your focus on money.

 

 

Questioning the decision making of the most valuable and profitable company in the world deserves that response from me.

 

Do you really think in your wildest dreams that Apple would spend $90,000,000,000 on something they don't think will help shareholders and the company?

 

Saying Apple is lending money to gamblers and has ran out of ideas is beyond stupidity.  And I will continue to expose people like you, good manners or not.

 

And WTF are you talking about focusing on money.  This topic is about the $17B bond and $90B buyback.  it is about money.  You are the one off topic talking about satelites in the north pole so you need to GTFO.

post #30 of 36
Quote:
Originally Posted by sog35 View Post


Questioning the decision making of the most valuable and profitable company in the world deserves that response from me.

Do you really think in your wildest dreams that Apple would spend $90,000,000,000 on something they don't think will help shareholders and the company?

Saying Apple is lending money to gamblers and has ran out of ideas is beyond stupidity.  And I will continue to expose people like you, good manners or not.

And WTF are you talking about focusing on money.  This topic is about the $17B bond and $90B buyback.  it is about money.  You are the one off topic talking about satelites in the north pole so you need to GTFO.

So, you don't understand my remarks. That would explain the anger.
post #31 of 36
Quote:
Originally Posted by knowitall View Post


So, you don't understand my remarks. That would explain the anger.

 

I understand your remark and its pure garbage and the same FUD that the media/wall street hacks have been heaping on Apple the last 18 months.

post #32 of 36
I know nothing about how this stuff works, so this is probably a silly question, but if Apple USA is raising capital through a bond sale that can be done in international markets, what's to stop Apple using its overseas cash to buy the bonds?

Apple international could own Apple USA's debt, couldn't it?
post #33 of 36
I'm sure the SEC must have rules prohibiting that.

censored

Reply

censored

Reply
post #34 of 36
Quote:
Originally Posted by Crowley View Post

I'm sure the SEC must have rules prohibiting that.

 

I wonder what the negative would be from their perspective? Apple wouldn't be repatriating it's overseas cash, just using it to fund AAPL activities within the US. As a debt, the cash is still technically offshore even though it's working for Apple in the US. 

post #35 of 36
Quote:
Originally Posted by Mode 5 View Post

I wonder what the negative would be from their perspective? Apple wouldn't be repatriating it's overseas cash, just using it to fund AAPL activities within the US. As a debt, 
the cash is still technically offshore even though it's working for Apple in the US. 
The negative being a major incentive to not repatriate cash. Allowing selling debt to an offshore subsidiary without limitation or cost would be a pretty gaping hole in any revenue system, as there would be no need to formally repatriate cash in order to put it to work in your home country.

censored

Reply

censored

Reply
post #36 of 36
Quote:
Originally Posted by Crowley View Post

The negative being a major incentive to not repatriate cash. 

 

But isn't that the problem in the first place? Apple's acquisition of offshore debts for its US based activities is the result of the disincentive that already exists to bringing offshore cash home. Far from bringing its cash home now, this is Apple deciding that it's more profitable to move its US based profits overseas as well. By taking on foreign debt, Apple will further reduce its tax burden in the US, meanwhile directly, or indirectly, Apple's international stock piles of cash will offset / neutralise the cost of that debt effectively at the rate where it's sourced. They'll pay overseas tax rates on their growing overseas cash piles, but obviously they've done the numbers and discovered it's more profitable to grow a foreign debt in the US and pay their taxes overseas.  

 

The bottom line, is the bottom line! They no longer care where the cash is stashed, so long as they're maximising their return on it. Poor old Uncle Sam, however, is just going to end up going hungrier and hungrier.  

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: AAPL Investors
AppleInsider › Forums › Investors › AAPL Investors › Apple preparing $17B bond sale to help fund massive share buyback