Apple prepares for first debt issue

NEW YORK (AFP) - Apple moved on Monday toward its first-ever debt issue, 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 US$100 billion (S$123.4 billion) on buybacks and dividends to boost shareholder value.

The maker of the iPhone and iPad has a cash stockpile of at least US$145 billion, based on disclosures from its latest earnings.

But much of that is outside the United States, and repatriating that money would lead to a big tax bite under current US law.

Last week, Standard & Poor's said it would rate Apple bonds AA+ and Moody's indicated it would rate them Aa1. The rating agencies said they would not give the top grade of AAA because of the fast-changing nature of the sector.

Apple posted a profit of US$9.5 billion on revenue of US$43.6 billion in the first three months of this year, compared to US$11.6 billion on US$39.2 billion a year earlier.

Quarterly sales numbers grew - with the number of iPhones rising to 37.4 million from 35.1 million a year earlier, and iPads surging to 19.5 million from 11.8 million.

But margins were clearly shrinking: the gross margin fell to 37.5 per cent from 47.5 per cent.

Apple shares rose 3.1 per cent on Monday to end at US$430.12, far below last year's peak above US$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."