Apple on the bond way!
It was all set to appear on the scene sooner or later and in tandem with what was predicted by the experts the world over; Apple Inc. is all set to enter the bond market. This is the first time in the long history of the company known for its innovative products that have provided new direction to the technology based items. The first ever debt issue or bond sale would be hitting the American markets in few days from now.
Apple Inc. is busy filing documents for the purpose now days. The step is regarded as revolutionary that could help the legendary company in stemming its stock slide that is quite evident from the trends of late.
In the latest development, the technology major filed document with the Securities and Exchange Commission (SEC).The company has opined to sell debt securities in more than one offering as part of the bond sale.
The plans of the company were almost clear after the quarterly results last week where it underperformed first time in last many years. Apple was discreet in anticipating the plummet as the think tank of the technology giant declared it plans to more than double the limit of its cash return program to the shareholders through the process of buybacks.
The report pointed towards the fact that it would spend something around $ 100 billion on its buyback plans and dividends collectively to augment the share value that has slid considerably over the last few months.
The leader in innovation that is renowned for its radical products such as iPad and iPhone has a cash accumulation of at least $145 billion as per its latest data on earnings from the last quarter.
However, margins have greatly shrunken as the gross margin fell from 47.5 % to 37.5 % of late.
Although, the decision to introduce bonds in the market is prudent considering the present scenario but how effective they can be over the long run is worth consideration.
Nonetheless, one thing is explicitly clear that unless the technology major comes up with another product in the same league as iPad and iPhone the shareholders value won’t be receiving any major resistance whatsoever.