You have been provided below with an article about Apple and its first issue of debt...

  

Transcribed Image Text:

You have been provided below with an article about Apple and its first issue of debt securities. Apple prepares for first debt issue - 30 April 2013 New York - Apple moved towards its first-ever debt issue on Monday, filing documents describing plans for bond sales which would be used to pay dividends in an effort to stem its stock slide. "We may, from time to time, offer to sell debt securities in one or more offerings,' the California tech giant said in a document filed with the Securities and Exchange Commission. Apple executives described their plans last week when the firm reported quarterly results, indicating the company would spend $100bn on buybacks and dividends to boost shareholder value. The maker of the iPhone and iPad has a cash stockpile of at least $145bn, based on disclosures from its latest earnings. Apple shares rose 3.1% on Monday to end at $430.12, far below last year's peak above $700. Some analysts say the company is facing a crisis in a market where competitors are closing in. This is a crisis,' Indigo Equity Research said in a recent note. 'Apple is making similar errors that Nokia and Motorola did; by not releasing sufficiently innovative product upgrades frequently enough. A problem is that once consumer tech companies lose their edge, they rarely regain it.' Source: Fin24, April 2013 Requirement: Write a memorandum to the shareholders commenting on whether Apple's decision to issue long-term debt is appropriate and give your opinion regarding management's proposed use of these funds. Your answer should refer to: Apple's motivation for the debt issue, how the issue may affect the company, and whether the issue is appropriate in the circumstances. Refer to relevant capital structure theories and indicate other factors that Apple should consider when deciding on the amount of debt to issue. You have been provided below with an article about Apple and its first issue of debt securities. Apple prepares for first debt issue - 30 April 2013 New York - Apple moved towards its first-ever debt issue on Monday, filing documents describing plans for bond sales which would be used to pay dividends in an effort to stem its stock slide. "We may, from time to time, offer to sell debt securities in one or more offerings,' the California tech giant said in a document filed with the Securities and Exchange Commission. Apple executives described their plans last week when the firm reported quarterly results, indicating the company would spend $100bn on buybacks and dividends to boost shareholder value. The maker of the iPhone and iPad has a cash stockpile of at least $145bn, based on disclosures from its latest earnings. Apple shares rose 3.1% on Monday to end at $430.12, far below last year's peak above $700. Some analysts say the company is facing a crisis in a market where competitors are closing in. This is a crisis,' Indigo Equity Research said in a recent note. 'Apple is making similar errors that Nokia and Motorola did; by not releasing sufficiently innovative product upgrades frequently enough. A problem is that once consumer tech companies lose their edge, they rarely regain it.' Source: Fin24, April 2013 Requirement: Write a memorandum to the shareholders commenting on whether Apple's decision to issue long-term debt is appropriate and give your opinion regarding management's proposed use of these funds. Your answer should refer to: Apple's motivation for the debt issue, how the issue may affect the company, and whether the issue is appropriate in the circumstances. Refer to relevant capital structure theories and indicate other factors that Apple should consider when deciding on the amount of debt to issue.

Answer rating: 100% (QA)

To shareholders From Date Subject Apple s decision to issue ... View the full answer