What's Up With Apple: $14 Billion in New Debt, Update to iOS, Apple Car and More

One might think that a company with more than $75 billion in cash and marketable securities didn’t really need to borrow another $14 billion. In these days of cheap money, though, borrowing is often a plus, not a minus, to a company’s balance sheet.

Few balance sheets look better right now than Apple Inc.’s (NASDAQ: AAPL). The company has stated that it intends to become cash neutral in the future, meaning that its cash total will equal its total debt. To reach that goal, Apple is paying dividends and buying back stock — more than $3.6 billion in dividends in its first fiscal quarter of 2021 and nearly $25 billion in share buybacks during the same period.

The company is issuing six tranches of notes due in five, seven, 10, 20, 30 and 40 years. Yields on the notes range from 0.746% on the five-year notes to 2.812% on the 40-year notes. Apple plans to use the funds for general corporate purposes, including share buybacks and dividend payments. According to Bloomberg, the “$14 billion raised is more cash than 93% of non-financial S&P 500 companies have on their balance sheet.” The rich getting richer.

The bigger splash, at least among Apple fans, is the release of the first beta version of an updated version 14.5 of iOS. The new release includes Apple’s controversial privacy tracking feature that requires apps to get a user’s permission to be tracked for advertising purposes. This feature has put Apple at odds with Facebook Inc. (NASDAQ: FB), but more about that later.

iOS 14.5 also includes support for the new game controllers for PlayStation 5 and Xbox Series X. Apple Watch owners will now be able automatically to unlock their iPhones while wearing a facemask. Other new features also have been included.

According to a report at AppleInsider, TF securities analyst Ming-Chi Kuo said in a note to investors that Apple will work with Hyundai on the first model of an Apple Car that will be built in the United States by General Motors and in Europe by Peugeot. The article cites Kuo:

Apple’s deep collaboration with current automakers (Hyundai Group, GM, and PSA) who have extensive development, production, and qualification experience will significantly shorten the Apple Car development time and create a time-to-market advantage. We believe that Apple will leverage current automakers’ resources and focus on self-driving hardware and software, semiconductors, battery-related technologies, form factor and internal space designs, innovative user experience, and the integration with Apple’s existing ecosystem.

Kuo also believes Apple will market the vehicles at the “very high-end” or at least “significantly higher” than a standard electric vehicle. That makes sense because Apple has established itself as a premium brand in smartphones, computers and other devices. There’s no point in putting out a dime-store version of an electric vehicle.

Now back to Facebook. AppleInsider also reports that the social media giant will try to preempt Apple’s tracking transparency feature by asking its users to give the Facebook app permission to track them. By asking its users for permission before Apple does, Facebook could prevent the Apple tracking question from being displayed to the social media’s users. The move also may give Facebook an idea of the impact Apple’s opt-in tracking will have on Facebook’s business.