Apple may be planning to increase its dividend by 15% and increase the funds allocated to its stock buyback program from $30B to $35B. This claim was made in an investment note by RBC analyst Amit Daryanani, seen by Business Insider …
Following reports late last week that Apple is suing its iPhone modem supplier Qualcomm for $1 billion in the US, today Beijing’s Intellectual Property Court said Apple has also filed a similar suit in China seeking 1 billion yuan or over $140 million in damages (via Reuters).
In response to the new lawsuit, Qualcomm today issued its own press release and noted that Apple is claiming the company is in violation of China’s Anti-Monopoly Law. The press release also said that Apple is requesting “determination of the terms of a patent license” regarding the two companies’ cellular standard essentials patents, in response to which Qualcomm’s lawyers claimed Apple was offered deals consistent with the rest of the industry:
Update: The WSJ echoes the report, adding that $1B will just be the starting point, with possible increases based on demand, and stating that it will be mirrored by a similar bond issue in Australia. It says that in all Apple is aiming to raise $3-4B in the Asia Pacific region.
If an unconfirmed Reuters report is correct, Apple could be tapping Taiwan for more than just components and assembly – it is also looking to raise capital from the island.
Apple Inc plans to issue bonds in Taiwan for the first time with the aim of raising $1 billion, sources familiar with the matter said, joining a queue of big global names that have sold billions of dollars on the island’s busy debt market.
Update: The WSJ reports that Apple’s target is to raise $12B, “on the higher side of investor expectations.”
An SEC filing reported by ZeroHedge reveals that Apple has announced plans for a series of new bond issues to raise money for further stock buybacks and dividend payments in what could be a 10-part deal.
General corporate purposes, including repurchases of Apple’s common stock and payment of dividends under the company’s program to return capital to shareholders, funding for working capital, capital expenditures, acquisitions and repayment of debt.
MarketWatch adds that the notes will offer floating-rates maturing in 2018 and 2019, and fixed-rates maturing at a range of dates from 2018 all the way through to 2046. Apple has not yet revealed either the rates to be offered or the total sum it plans to raise, but previous issuances suggest we can expect the amount Apple is borrowing to be substantial …
Apple today has launched a “benchmark” sized Australian dollar corporate bond issue, its first in Australian currency. Investors in Australia were informed of the two-part bond sales just recently and told that Apple will offer four-year and seven-year bonds in the country.
Apple’s first ever Japanese bond sale will raise more than had been previously estimated. An SEC filing reveals that the sale will raise ¥250B ($2B), more than the ¥200 billion ($1.6B) which had been reported earlier.
Apple is selling the bonds in Japanese yen due to the extremely low interest rates in the country, with Apple offering a rate of just 0.35%, paid twice a year in June and December. Goldman Sachs, one of the two underwriters of the bond issue, said that the market would welcome the offering.
“It’s Apple’s first time issuing in yen. Their ratings, credit fundamentals and familiarity within the Japanese market are very high,” said a Goldman Sachs banker. “The outcome proves how much the market welcomed seeing this issuer come up.”
Although Apple has huge cash reserves, the majority of this is held overseas and cannot be repatriated back to the U.S. without large tax liabilities. It is cheaper for the company to borrow money to fund its stock buyback program and to fund dividend payments. Apple announced in April that it will spend $200B by the end of March 2017 on a mix of share repurchases and dividend payments.
Photo: randomwire.com
Apple financial engineering is nothing to sniff at: with nearly $200 billion in cash, they have a lot of flexibility to initiate capital trades. Following a major seven-part domestic bond sale in the US, Nikkei reports it is now looking to do something similar in Japan.
At its last earnings call, Apple announced that it is expanding its capital return program by more than 50%. This means the company is now looking to repurchase over $140 billion worth of shares and a larger dividend for shareholders.
To fund this activity however, it is cheaper for the company to sell domestic company debt than repatriate its ever-increasing cash hoard that is ‘trapped’ overseas. Therefore, Apple has today announced it will issue a new 7-part bond to raise the funds.
Having filed a prospectus today with the SEC, Apple plans to offer around $5 billion in bonds, following a 2013 bond offering of $17 billion, and a 2014 offering of $12 billion. While Apple’s corporate coffers stand at over $178 billion after its most recent record-breaking quarter, even thriving companies sometimes use bond offerings to fund projects, lessening tax consequences in the process.
Deutsche Bank and Goldman Sachs put together the offering, which Apple says will be used towards
repurchases of our common stock and payment of dividends under our program to return capital to shareholders, funding for working capital, capital expenditures and acquisitions and repayment of debt.
As noted by The Wall Street Journal, the bonds will mature in 5 to 30 years, with a 10-year bond offering a 0.95% greater return than government-issued Treasurys. Apple carries a Moody’s rating of Aa1, the service’s second-highest rating, suggesting that the investment is exceptionally low-risk.
Apple’s second major bond sale, designed to raise cash for the stock buybacks Tim Cook promised in the company’s latest earnings call, was more than three times over-subscribed, reports the WSJ.
Apple sold $12 billion of debt of varying maturities at interest rates that were mostly less than a percentage point above comparable U.S. Treasury debt, highlighting widespread faith in the iPhone maker’s prospects. Investors flocked to the offering, placing more than $40 billion in orders.
This followed a $17B bond sale almost a year ago, which set a new record for corporate debt. In both cases, Apple only had to offer interest rates marginally higher than Treasury bonds, which are considered the safest form of investment.
Although it may seem odd for a company as cash-rich as Apple to need to borrow money, the position arises because the majority of the $150B cash Apple owns is held overseas. If Apple were to repatriate the cash, it would be taxed at a rate far higher than the interest rate it has to pay on the bonds.
Sums done by Moody’s Investment Services (via Bloomberg) confirm reports that Apple’s approach of borrowing the $100b needed to fund its stock buy-back and dividend plans will result in massive tax savings, estimated at $9.2B …
Expand
Expanding
Close
The first stage of Apple’s plan to spend $100 billion in share buy-backs and increased dividends was completed yesterday as Apple sold $17 billion’s worth of corporate bonds – the world’s largest corporate debt sale.
Although Apple has a cash balance of $145b, much of this money is held in overseas subsidiaries, and Apple would have to pay tax on it to bring it back to the USA. It is cheaper for it to borrow the money instead …
Expand
Expanding
Close
From 9to5Toys.com
Find the best deals/buying advice at 9to5Mac.com/products
Update: As is often the case, Amazon has matched Best Buy (which could save some tax $)
Best Buy is taking $125 off all of their stock of iMacs for two days only. New iMacs now start at $1174.99 for the 21.5-inch variety and $1674.99 for the 27-inch variety shipped or site-to-store. These iMacs with super-slim profile were released late last year with low inventory and these are the deepest discounts we’ve seen.
More specials at Best Buy’s 2-Day sale.
Expand
Expanding
Close
There were reports earlier this week that District Judge Lucy Koh issued a preliminary injunction on the Galaxy Tab 10.1 in the United States related to the ongoing cases between Apple and Samsung. At the time, reports claimed the ruling would kick in once Apple posted a $2.6 million bond. Today, FossPatents reported that Apple has since done so, allowing the preliminary injunction to formally take effect:
Apple didn’t hesitate to post its $2.6 million bond to protect Samsung against the possibility of a successful appeal, in which case the preliminary injunction would be found to have been improperly granted… the injunction has taken effect and Samsung must abide by it. Otherwise Apple could ask the court to sanction Samsung for contempt.
With Apple pulling $39.2 billion in revenue last quarter, we know it takes only a matter of minutes to make that $2.6 million, which is meant to protect Samsung from damages in case the injunction is found to be wrongly issued. On Tuesday, Judge Koh made a statement following her ruling that Samsung “does not have a right to compete unfairly, by flooding the market with infringing products.” FossPatents continued by giving its outlook for the trial set to take place this summer:
Expand
Expanding
Close
Bob Apfel, the founder of Bondholder Communications Group, told Fortune this morning that he completed the debt restructuring of Greece a couple of weeks ago with the help of an iPad. Well, 100 of them—to be exact.
Greece looked at bankruptcy head-on just a few months ago, but it found mercy through a round of restructuring transactions where the country settled for a smaller percentage of the its bonds’ paper value. Thousands of bondholders needed to first give the go-ahead, but such an endeavor, as Fortune coined it, was a “logistical nightmare.”
At that point, Apfel said he bought 100 iPads equipped with a customized app for debt-restructuring. His team of financial wizards received the tablets and immediately met with investors and other money gurus across the European Union. Of course, the iOS tablet successfully helped Apfel and his firm to close the deal that shrunk Greece’s debt to a more manageable sum.
According to Fortune:
- Toward the end, things got pretty exciting.
- ‘I watched hundreds of millions of bonds being ‘slam dunked’ as these guys were running down the halls,’ says Apfel. ‘Split-second decisions were made that couldn’t have been made without the data platform.’
- When last deal finally closed on April 25, $270 billion of Greek debt had been reduced to $130 billion.
- ‘It was the largest financial transaction in the history of the world,’ says Apfel. ‘And we couldn’t have done it without the iPad.’
Related articles
