Apple Lays Groundwork for First Debt Sale Ever

In order for Apple Inc. to fund their $100 billion capital return program for their shareholders, they will be selling their debt for the first time. They also plan to buy back $60 billion shares so that the company will have more capital to invest with in the future. Apple is a technology company that is known for its large amount of cash available, unlike other companies.  However, fairly low interest rates and tax responsibilities are some reasons why Apple is choosing to sell debts in some form of currency. Because of this news, rating agencies such as Standard & Poor’s and Moody’s have given Apple an AA+ and Aa1 rating, respectively. Analysts have deduced that technology companies like Apple are not as safe to invest in because of the constant shift in consumer taste. They see Apple as a mature company, where growth is beginning to slow down.

In every business cycle, there will be times when the company reaches the mature state. Apple’s growth has been slowing down ever since the release of the iPhone 5.  It has also been relying on older products to boost their sales, even though there does not seem to be a purpose behind some of their older products. In this society, people are always demanding for new developments. For Apple to continue to be one of the biggest technology companies, it will have to be able to compete in the market that is constantly changing.

 

Written By: Melody Mark

Source: Cox, Josie. “Apple Lays Groundwork for First Debt Sale Ever.” Reuters. The Thomson Corporation, 29 Apr. 2013. Web. 29 Apr. 2013.

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