Apple Is Going Into Debt To Finance Its $100 Billion Stock Buyback



Last week, Apple announced its plans to return $100 billion in stock to investors over the next few years. The increase more than doubled Apple’s original capital return program of $45 billion. Quarterly dividend payments also increased 15%, or $3.05 per common share.

Apple may have a huge cash pile, but even the world’s most valuable company will have to go into debt to finance a return program of this size. It’s the first time Apple has borrowed since 1996.

According to Reuters:

Apple took initial steps Monday for what would be its first debt sale ever, as the U.S. computer giant lays the groundwork for what would be one of the most anticipated bond sales of the year.

The company was to begin investor calls today led by Deutsche Bank and Goldman Sachs, a source familiar with the situation told IFR, and filed SEC paperwork for a debt offering.

Apple has a long history with Goldman Sachs. Steve Jobs was always opposed to working with banks, but Apple has a long history with Goldman Sachs and Deutsche Bank. Tim Cook speaks at the Goldman Sachs conference each year, and Deutsche Bank advised Apple went it bought NeXT from Steve Jobs in the 90s.

For the longest time Apple has been the only big tech company without any debt, but the company will need to finance about $15-$20 billion for the next few years, notes Reuters. Apple technically has $145 billion in cash on the books, but more than half of it is stored overseas to avoid U.S. taxes.

Source: Reuters

  • MrsCleaver

    Sounds like Cult is pot-stirring… again. Many, if not most companies borrow against holdings in order to finance major capital expenditures. It hardly qualifies as “going into debt.”

  • Steffen Jobbs

    But “going into debt” will capture a lot more clicks. Everyone would like to see Apple go into debt because hardly anyone likes successful companies with a mountain of cash. “Going into debt” makes it sound like Apple’s share price collapse has put the company on the road to bankruptcy. Hearing about how the mighty have fallen is always good for a few yucks.