Apple plans new four-part debt offering

Apple announced in a regulatory filing with the U.S. Securities and Exchange Commission today that the company is planning a four-part debt offering, proceeds of which will be used for general corporate purposes, including share buybacks and dividends, working capital, capex, acquisitions, and to repay debt.

Apple debt offeringTony Owusu for TheStreet:

Apple is planning to issue notes that mature in 2023, 2025, 2030 and 2050 with Goldman Sachs, Bank of America Securities, JPMorgan and Morgan Stanley as underwriters on the deal.

Apple says that it will use proceeds from the debt sale for general purposes, including share buybacks and dividends, working capital, capital spending, acquisitions and debt repayment.

MacDailyNews Take: With debt this cheap, it’s a no-brainer for a new Apple debt offering. Expect many more companies to follow suit.

This is a very good time to borrow money, which means it may not be such a great time to lend money. — Warren Buffett, May 2, 2020

Apple’s 424B2 filing with the SEC is here.


    1. When you don’t understand something, it’s best to refrain from commenting.

      “Refrain” means “don’t do it.”

      Yes, I think you’re stupid; likely even stupid enough to be a Biden voter.

      1. Long Apple, The weather is nice in Cali and so is the money, saving and investing has made me prosperous, and party has nothing to do with business or finance, the ass in the White House has never been good in business, his dad was, Donald finance wise is similar to the Kennedy clan, the father Joseph Kennedy was the financial brains not the offspring, but you are probably too stupid and blinded by party recognize that.

        1. Interesting how you deflect. Bond Trader was commenting about your absolutely asinine comment and opinion about Apple’s financing incompetence. Your reply only proves his point. If you are prosperous, then you are just lucky, since your comment indicates that you know next to nothing about investment borrowing.

            1. Apple isn’t bad in business(the best fundamentals in tech), but taking on debt, when you have the money (billions) in house is dumb, you must be one of those one/zero thinkers unable to handle anything in the gray areas, long Apple and prosperous because of it, how about you?

    2. The reason is that it is cheaper to borrow more money to buyback shares and reduce the cost of dividends.
      Apple then uses its cash to pay off the debt while still making money out of the whole process.
      It is noteworthy that Apple’s debt has been constantly under $100BB, which means they are paying off as much as the borrow.

      The key to all this is reducing outstanding shares. Since 2014 Apple has reduced its share # by a third. That’s a huge number and the cost of dividends have stayed the same because of this even though Apple raises the $ per share every year.

      Heads up – I’m unable to log in to wordsmith. Anyone else having the same problem?

      1. That is so ridiculous, it hardly deserves an rebuttal, but here it is anyway.

        They spend hundreds of billions on buybacks, but spend in the low billions with dividends. Buying back all of that stock does nothing to help buybacks.

        1. Mel, they are not long Apple, more than likely management or a MBA at some other company? Doing the same thing Apple is doing currently doing, have you notice the big 5 in tech move up down at the same time on the stock market, but they are not the same from a finance standpoint.

  1. S a major problem. They have more than enough debt with $110 billion now. The now have more debt than feee cash. This offering will make that even worse. All of this makes no sense.

    1. If one looks back to ‘12, the #1 purchasing sector of the stock market was BUYBACKS. Read again, it was the #1 use of dollars for stock purchases. Buybacks are couched as a vehicle to lessen the company’s shares in the wild, giving all shareholders a bump in their share price. Mathematically, this is true. Effectively, one has to hold A LOT of shares to “feel” the gain.

      What’s really disturbing about buybacks is what was 1st mentioned. A company’s share price rises w/o any equivalent gain in revenue, sales growth, etc. It unhinges the true health of a company’s health from reality. I’m not saying AAPL isn’t healthy, but in the current muck, we’ve seen how certain companies “hid” their health in the “growth” of BB’s. Maybe more importantly, it greatly affects the the avg Joe/Mary when they choose to buy into the exuberant growth they see in the market, when in truth, there’s A LOT of air in comparison to true market health. We need more truth in the market and less veneer/shell gaming.

      Ok, I’ll eat my words now. As a holder of AAPL, I’ll selfishly call it a “good” move, as I like a higher share price. Because of BB’s, the analysts clap and the public sees the higher prices and will be more likely to be a part of the rise (buying), the stock can maintain some momentum…which, especially now, might keep it from the low 200’s. If there ever was a time to strategically employ BB’s, this may be it. With that said, I’m quite hungry for market truth and BB’s can sidestep truth.

  2. Cook and Maestri have repeatedly stated that their goal is to be cash neutral.

    I don’t care if you’re a small company with a handful of employees or a trillion dollar company, being cash neutral is asinine. When (not if) bad things happen any company (and I do mean any company) needs cash reserves above and beyond debt and fixed expenses to ride through those bad times.

    One of the major efforts of Jobs back when Apple was clawing out of the Dark Days was to eliminate ALL of Apple’s debt. Some short term debt is often necessary no matter how wealthy a company is or how large or small it is. There is no excuse for Apple to incur debt that stretches to 2050. No excuse at all.

    And before anyone claims that I don’t know what I’m saying. I HAVE run companies with a handful of employees and have (currently) run a company with a valuation of $2 billion (an independent assessment by Deloitte). How many other posters here can honestly say the same thing?

    1. Right on, whether you are a individual, a small company or a large one the fundamentals are the same going into debt when you don’t need to is stupid and Apple doesn’t need to, but the money lenders/finance people will egg you on without fail.

  3. Apple has and generates too much cash.

    Apple’s goal of becoming net cash neutral over time means to arrive at a place where the company has “an equal amount of cash and debt, and that they balance to zero” (Tim Cook).

    To bring net cash to zero, it will have to either reduce gross cash, increase debt, or some combination of the two.

    Apple’s debt structure includes bonds that extend well into the 2040s, so the company has decades of visibility, and interest expense is negligible since dividend and interest income covers those costs.

    Again, regarding those complaining of “debt” above: When you don’t understand something, it’s best to refrain from commenting lest you sound like simpletons.

    1. No I understand Boeing, IBM, Netflix and Tesla companies that in the end will crap out, nothing but smoke and mirrors debt and buybacks, Apple doesn’t need to go down that road but the MBA/Finance people will take them there.

  4. Issue options to executives, buyback stock, put options “in the money” to enrich executives, while screwing stockholders through lower dividends.

    Rinse. Repeat.

    Why buybacks were once illegal, and should be again.

  5. So, if you are a part owner of a company that has 10 owners, and one owner decides to sell his part back to the company, the company is still worth exactly the same as before the individual owner sells. However, each of the remaining owners now have 1/9th ownership of the company. This is an internal rate of return on their investment of the company.

    This is a way of giving back to the owners without them having to declare income on dividends, or to declare any capital gains. While it is true that this might give the appearance of growth due to better sales, etc., it is still true growth in the intrinsic value of share price. Just because the shares don’t rise from sales and income growth for the company, as a whole, it is still true growth per share.

     is returning investment to share holders, while reducing its total dividends paid, and all the remaining share holders benefit. Apple’s goal has been stated for some time now that they want to be cash neutral. This really helps when they have more cash than can reasonably be reinvested in research or acquisitions.

    1. Baloney!, Gary hit it out of the park, buybacks are for management insiders which is why losers like Boeing, IBM, and their parasitic minions Banks, Hedge funds, big institutional investors love them, the individual retail share holder well… is run over.

          1. No, management are not the only benefactors of buy backs. You’ve heard what W Buffet said about Apple’s BB’s?

            Besides benefitting the large share holders, it pushes a stock higher without related earnings. It’s a way of buying growth and that’s “bubble-ish.”

      1. When  started their buybacks, over 9b shares were outstanding. Now 4.24b shares outstanding. If you had shares back then, the value per share has more than doubled due to that alone.

        Quit drinking the cooled.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.