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 …
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’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
Analysis by Above Avalon‘s Neil Cybart suggests that Apple is unlikely to accelerate the pace of its stock buyback program as it is already spending almost all of its available US cash stockpile on share dividends and buybacks.
Out of $155B of cash, only $18B is available in the U.S., with the rest sitting in international subsidiaries unable to be sent back unless repatriation tax is paid […] Apple is essentially taking most, if not all, of its free cash flow from U.S. operations and piling it into share buyback.
Cybart does some number-crunching to suggest that Apple is likely to buy back around $30B worth of stock next year, though acknowledges that new product lines like the Apple Watch make it difficult to forecast future profits with any certainty.
Apple has come under consistent pressure from billionaire shareholder Carl Icahn to increase the pace of its stock buyback program, recently suggesting that an accelerated buyback could see the company achieve a trillion dollar valuation. It was recently estimated that Apple’s cash reserves would have reached $210B without the dividend and stock buyback program started two years ago.
Icahn: I had a ‘good conversation’ with Tim Cook; we both believe Apple is undervalued.
Previously, Icahn urged Cook for a $150 billion buyback and Apple Senior VP Eddy Cue oddly Tweeted “carl ichan” a few days ago before deleting the Tweet.
