Dividends: Apple increasingly open to taking on debt to increase cash distributions to shareholders

“It’s been more than two months since Apple Inc. disclosed its management and executive teams were in active discussions about returning more cash to shareholders,” Steven Russolillo reports for The Wall Street Journal. “So, where’s the dough?”

“Toni Sacconaghi, a technology analyst at Sanford C. Bernstein & Co. in New York, predicts a bigger cash payout from Apple is coming, but not until ‘weeks’ after the iPhone and iPad maker’s April 23 earnings announcement,” Russolillo reports. “Such a proclamation may come as a bit of a disappointment. Some investors anticipated Apple would’ve disclosed its cash plans last month, largely because Apple unveiled its existing dividend and buyback plans in mid-March one year ago.”

Russolillo reports, “Sacconaghi said he expects Apple to take on debt to pay for a larger cash distribution to shareholders, as opposed to repatriating offshore earnings that would incur taxes. He has estimated Apple holds more than 2/3 of its cash offshore, a scenario that makes it harder for the company to simply snap its fingers and return more cash to shareholders. ‘Our conversations with investors who have met in person with Apple executives this quarter suggest that Apple has become increasingly open to the concept of debt, which represents a major change in mindset,’ Sacconaghi said. ‘We have long advocated that taking on debt makes eminent sense for Apple, given today’s prevailing rate environment and Apple’s strong credit rating.'”

Read more in the full article here.

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24 Comments

  1. I have long advocated that analysts that “advise” Apple to throw away it’s money on a wild short term shareholder bonanza give away go fuck themselves.

  2. I hope Apple doesn’t blindly follow these idiot’s advice just to stop the bad publicity they generate. Trying to please them is not something Steve would have cared a rat’s ass about.

  3. “Our conversations with investors who have met in person with Apple executives…”

    I’m pretty sure these analysts make this stuff up, hoping to force Apple’s hand.

    If Apple takes on debt (and interest) just to satisfy the greed of these no-nothing shysters then Cook really has lost the plot.

  4. I hope Apple will not follow Wall Street’s advice. Where other companies put their trust in Wall Street’s advice and lose their shirts in the process, Apple has always eschewed Wall Street’s trickery and do well. Wall Street has consistently put the economy into trouble many times because of its greed. It’s better that Apple avoids the temptation of dealing with Wall Street’s bankers because it has the luxury to do so. Please Apple, don’t blow away your cash pile on unnecessary schemes.

    1. Thus my terms ‘Biznizz’ and ‘BizTards’. Analcysts like this assh0le at the WSJ are either parasites and/or are incredibly stupid. Either way, they are ENTIRELY IGNORABLE. Anyone with a basic, solid, sensible business background can see right through these scumbag-morons. Expect total DISRESPECT from these biznizz bozos, meaning:

      You are the sucker mark they’ve been waiting for.

  5. Oh and to add, I think we can all see now why SJ refused to play this game. You give and they always want more and more to feed a never sated appetite, even if it is to the detriment of the company which the worst of them will ditch anyway before it reaches the potential oblivion that their short sighted and self destructive policies encourage.

  6. The Bank of Apple is due to be opened soon.
    Watch as Banks round the world collapse as Apple’s cash is withdrawn to be deposited into “The Bank of Apple”.
    See their lending revenue’s dry up as the deposit wells run dry from Apple inc. customers transferring their accounts to the “Bank of Apple”.
    Watch wall street run into a buffer and brokering firms run into a wall as their customer base collapses.
    Observe those pompous self aggrandandising anal-ists scream their asses out as their wall street clients and brokers evaporate by the dozen.
    Won’t that just be the day? Roll on it coming to pass!!

  7. We have long advocated that taking on debt makes eminent sense for Apple

    Then, Steven Russolillo who reports for The Wall Street Journal, you’re an IDIOT.

    Dear Apple: Pay no attention to the Wall Street parasites who have the WORST of intentions. Thank you! :-Derek

    1. ERROR! Apologies to Steven Russolillo who reports for The Wall Street Journal! Bad attribution.

      Please read:

      Then, Toni Sacconaghi, a technology analyst at Sanford C. Bernstein & Co. in New York, you’re an IDIOT.

      (Thank you to whoever dinged me above. It lead me review what I wrote and go ‘oh no, I’m the idiot’).

      1. Because Apple, with a top credit rating, could take on debt for a very low interest rate, not much more than 1%. As they earn but a little bit above that on their cash hoard, it would turn out neutral. But, even more importantly, Apple can’t use the 2/3rds of their money for dividends because it’s being held out of the US, and bringing it back will add taxes that would cost far more than the interest rate on the debt.

        What will Apple do with all that accumulating money? At some point they must do something. Borrowing against it is a good idea.

  8. “So when we say that “…the marginal dollar borrowed by a nonfinancial business [post-’85] was simply handed on to shareholders, without funding any productive expenditure at all,” we are making a statement about what “funds” what. We’re saying that all the borrowing went to payouts, and all the profits went to investment. The reverse could be equally accurate, given that shareholders from ’04 to ’08 were paid about $200 billion more than their companies earned in profits.”

    http://www.asymptosis.com/does-saving-fund-investment.html

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