Apple issues $14B worth of bonds to fund buybacks, corporate initiatives



  • Reply 21 of 22
    GeorgeBMacGeorgeBMac Posts: 11,421member
    danox said:

    flydog said:
    byronl said:
    Hah? Can someone please explain what does this all mean for dummies?

    It means that, instead of reinvesting profits into growing and expanding their business, that the owners are taking their profits out of that business.    But, even worse, the company is borrowing the money that those owners are sucking out of corporate coffers.

    We know that corporations must constantly be growing and moving or they die -- and that requires the wise use of capital.   It is perhaps why less than 20% of the U.S. Fortune 500 companies from 50 years ago are still Fortune 500 Companies today -- financial managers taking the profits and sucking the life blood out of the corporations they control.
    Your analysis is overly simplistic and just plain wrong. 

    It doesn't mean that at all. Dividends are how profits are distributed to shareholders. While companies use bond proceeds for dividends (and Apple does do this), the sale of bonds is generally done because it is cheaper than using cash (e.g., repatriating cash would require paying taxes).   That is a "wise use of capital."

    Moreover, the fact that the makeup of the Forture 500 changes over time doesn’t mean that " financial managers [are] sucking the life blood out of the corporations they control."  The makeup of the Fortune 500 changes for many reasons, among them the emergence of new industries and new companies that outpace their competitors.  It would be quite absurd if the makeup of the Fortune 500 never changed since it would point to a lack of competition and innovation. 

    IBM, Xerox, Intel, HP, and Kodak, say differently all are on the long slow decline, MBA’S and bean counters are eating those companies out from the inside.
    Lack of growth and innovation is different than fiscal mismanagement.   Once a company has the cash they need to use it wisely.

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