Apple May Incur Another $17 Billion in Debt, Wells Fargo Analyst Says
After spending $14 billion on share repurchases in less than 14 days, Apple will need another round of “cash” up to $17 billion, thinks a Wells Fargo analyst. Maynard Um has made a quick calculation of Apple’s onshore cash and money spent on the share buyback program, and he foresees the company incurring debt in the near future (via StreetInsider).
“With the latest repurchases, this implies AAPL has used $40B of its $60B repurchase plan. Assuming AAPL repurchased shares at around $510, this would imply a repurchase of 27.5MM shares, which would result in a $0.23 increase to our FQ2 2014 EPS to $10.74 from $10.51 and $0.63/$1.02 increase to our FY2014/FY2015 estimates, all else equal,” said Um. […] However, with $34.4B of cash onshore at the end of FQ1, we believe Apple will have to raise debt in order to fund the dividend increase and another share repurchase program,” added the analyst.
The analyst thinks Apple will opt for the same amount as last April, when the iPhone maker sold $17 billion of bonds as it sought to help finance a $100 billion capital reward for shareholders.
Last year, Apple issued $3 billion of floating-rate notes and $14 billion of fixed-rate securities in six parts with maturities from three to thirty years.