“Apple expects to sell debt in the U.S. and abroad and use any proceeds to fund the company’s share repurchases and dividends, Luca Maestri, vice president and corporate controller, said on Apple’s earnings call on Wednesday,” Cherney reports. “Apple on Wednesday added $30 billion to its stock-buyback plan, and now aims to return more than $130 billion to shareholders by the end of 2015. It also raised its dividend about 8%. Chief Executive Tim Cook said the company expanded the buyback program because management doesn’t believe the full value of the company is reflected in the stock price.”
“Apple issued 10-year debt, maturing in 2023, to yield 0.75 percentage point more than comparable Treasurys, at a time when the 10-year Treasury note was around 1.6%. The 10-year note on Thursday yielded 2.69%,” Cherney reports. “Apple’s 2023 bonds traded recently at 0.66 percentage point more than Treasurys.”
Read more in the full article here.
MacDailyNews Take: Debt is cheaper than repatriation.
U.S. corporate taxes are obviously too high.
Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth. – Apple CEO Tim Cook, May 21, 2013
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Tagged: AAPL, Apple, Apple bonds, Apple buybacks, Apple debt, Apple dividends, Apple stock, bonds, Carl Icahn, debt, iBonds, repatriation holiday, share repurchases, tax holiday, tax repatriation, Tim Cook, U.S. taxes
