Today Apple files a prospectus with the Securities and Exchange Commission, in order to sell $5 billion worth of debt, according to reports.
Apple to raise $5 billion through bonds
The complete financial minutiae have not yet come to come to light, but it seems that the money raised will cover “general corporate purposes, including 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.”
Bloomberg’s Lisa Abramowicz commented on Twitter that she believes the proceeds received from the bond sale will go towards buybacks and dividend payments.
The news follows Apple’s previous bond sale in November last year, in which Apple issued bonds in Euros. In that sale, Apple sought to raise €2.8 billion ($3.5 billion) for “general corporate purposes”, which once again was mainly attributed to share buybacks and dividend payments.
The prospectus issued today follows in the wake of Apple’s hugely successful Q4 2014 quarter in which the company posted a record-breaking revenue of $74.6 billion on sales of approximately 75 million iPhones, which sent the stock soaring when the market opened on Friday. Apple stock has enjoyed a surge in the last week as analysts have upgraded the Cupertino-based company mainly on the strength of its impressive quarterly results.
Apple now holds around $178 billion in cash and securities, but much of it is currently held outside the U.S. and would attract significant taxes if it was ever repatriated. As a result, Apple has favoured bond sales at very favourable rates, as a cheaper way to fund such activities, and the company then repays the bonds over time from its ongoing operations. However, recently there have been calls for tax changes so that Apple could bring the money home.
Larry Banks is a keen follower of technology and finance. He has worked for a variety of online publications, writing about a diverse range of topics including mobile networks, patents, and Internet video delivery technologies.