What a strang measure！
Because of taxe consideration.
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2011-7-21 Apple’s Cash Hoard Exceeds GDP of 128 Countries
forbes.com
Apple has a cash pile larger than the total valuations of most other companies. Yet it is issuing bonds so as to borrow yet more money. Why?The answer lies in one of the quirks of the tax regime. As is shown here:
According to analyst estimates, Apple has $145 billion of cash – but only $45 billion on hand in the US, and thus not enough to fully fund the share buy-back program.
Under the US corporate tax code the profits of a company are of course taxed. That’s the corporate income tax. However, profits made outside the US are, if the company declares that they’re going to stay outside the US, then free from that corporate income tax. Of Apple’s $145 billion cash pile some $100 billion of it has been earned outside the US. And it’s being held outside the US and thus doesn’t, currently, have to pay the corporate income tax.
One of the things you cannot do with money offshore in this manner is either buy back the company’s stock or use it to pay a dividend. To do either of those you have to bring the money back onshore and by doing so you’ll have to pay the tax. That tax is, the headline rate, 35% currently. And Apple’s offshore profits have paid very little tax so far. So they would have to pay a substantial percentage of that tax if they were used to pay the increased dividend or to finance the announced share buy backs.
Thus Apple is issuing bonds which it can use to pay the dividend and so on. That offshore cash pile acts as a kind of backstop, investors aren’t worried that Apple won’t pay them back, but it cannot be used directly.
We’ve also got the announcement of the bond issues themselves:
The company intends to issue debt that includes floating- rate notes maturing in 2016 and 2018 and fixed-rate securities due in 2016, 2018, 2023 and 2043, Apple said today in a regulatory filing. Proceeds may help Cupertino, California-based Apple avoid so-called repatriation taxes on its $102.3 billion of funds held overseas as it returns an additional $55 billion to shareholders through 2015 to compensate for a stock that’s been hammered by signs of slowing growth.The 2043 issue doesn’t quite fit my narrative here but the others do. For Apple’s US business alone is sufficiently cash generative that they’ll be able to retire these bonds as and when they become due.
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Warren Buffett: Steve Jobs Asked My Advice On Apple’s Cash But Didn’t Take It
Ryan Faas (10:23 am PDT, Feb 27th 2012)
There have been a lot of ideas suggested for what Apple could do with its nearly $100 billion in cash. Some have been serious suggestions like companies that Apple could buy while others are a little more absurd but illustrate just how much money Apple’s got.
Today, Warren Buffett revealed to viewers of CNBC’s Squawk Box that Steve Jobs wasn’t sure what to do with all the money Apple began raking in over recent years and asked for advice. He ultimately ignored that advice in his typical fashion while telling others that Buffett agreed with his decision for Apple to just sit on its money.
During his Ask Warren segment, Buffett recounted a phone conversation he had with Apple’s late CEO from a couple of years back. During the call Jobs asked his fellow billionaire about the options available to Apple. And while Buffett provided some advice, Jobs apparently decided not to take it.
It was an interesting conversation because I hadn’t talked to him in a long time. He said, ‘We’ve got all this cash. What should we do with it?’ So we went over the alternatives. It was kind of interesting.Buffett’s advice boiled down to four possible options: buyback Apple stock, issue dividends, use it to acquire other companies, and “sitting with it.” Buffett told Jobs he thought the best option would be to buyback stock.
‘I would use it for buybacks if I thought my stock was undervalued.’ And I said, ‘How do you feel about that?’ The stock was 200-and-something. He said, ‘I think my stock is very undervalued.’ I said, ‘Well, what better to do with your money?’Ultimately, Jobs and Apple ended up taking the last option that Buffett had mentioned, which was essentially nothing.
He just liked having the cash. It was very interesting to me because I later learned that he said I agreed with him to do nothing with the cash.
