Apple sells bonds to appease shareholders

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Apple sells bonds to appease shareholders

Warwick Ashford

The next Apple buying frenzy looks set to take place around company bonds, rather than the latest iPhone, iPod or iPad.

Apple has begun selling billions of dollars in bonds in a bid to return money to investors unhappy over Apple’s falling share price, according to the Guardian.

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After just one day, Apple’s first bond sale since 1996 appeared to have attracted about three times the money the company was seeking.

The move comes a week after Apple said it would hand back $100bn to investors by the end of 2015, after reporting its first year-on-year decline in profits in ten years in the face of increased competition.

By choosing to sell US debt instead of repatriating cash held overseas, Apple will avoid a huge tax bill.

Analysts said the sale of bonds with maturities ranging from three to 30 years is likely to be popular because Apple has $145bn in cash on its books.

Apple is not alone in taking advantage of demand for fixed-income investments while interest rates remain low in the wake of global economic recession.

Microsoft raised $2.7bn in debt last week issuing bonds in the US and in Europe, its first ever debt deal denominated in the Euro.

Analysts expect large corporations to continue turning to the bond market to raise cash for as long as interest rates remain low.

Despite its first profit decline in a decade, Apple still reported growth in sales with overall revenue for the first quarter at $43.6bn, up 11.2% from last year.

The company sold 37.4 million iPhones, compared with 35.1 million in the same quarter last year. Apple also sold 19.5 million iPads, up from 11.8 million, a year ago.

These figures show that Apple is still growing, but competition in the market from alternative smart devices and cheaper handsets is affecting the company’s profit margins.


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