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When you're a company like apple debt is not a problem, in fact you can even sometimes get paid to issue debt if you're very very profitable. This is nothing li

When you're a company like apple debt is not a problem, in fact you can even sometimes get paid to issue debt if you're very very profitable. This is nothing like your monthly credit card payment, it's more of an accounting convenience.

reubenmorais 9y ago
Can you (or someone) expand on this? It's not the first time I hear someone say that big $$$ views debt differently, but I don't understand how.
hn_throwaway_99 9y ago
Can you explain what the benefit of this would be? While I disagree with the parent (if you're sitting on a mountain of cash, debt is not a problem), what would the benefit be of having debt when you also have a mountain of cash? Certainly made sense before when Apple had cash overseas that they couldn't touch, but what would the benefit of it be now?
- jlmorton 9y ago
  There have been major tax advantages. The impact is lessened by the recent tax reform, but consider Apple has hundreds of billions of dollars in wholly-owned offshore subsidiaries. Up until recently, if they repatriated that cash, they had to pay 35% in taxes. Much better then for an Aa1-rated company like Apple to take out debt at a very low interest rate.
- pawelk 9y ago
  As I understand it, it would be similar to the situation when my savings account gives me 2% annually and I was able to take a loan at 1% annually. I wouldn't use my savings to pay off the debt, but the other way around.
adventured 9y ago
You're talking about the present. I'm talking about paying down debt now, because the really good times never last. You tightly constrain - or ideally eliminate - the debt now so that when the challenging times inevitably arrive, you have far more flexibility. See: GE, Sears, US Steel, Alcoa, GM, Xerox, Eastman Kodak, Kmart, IBM. All former giants that were laid low. The only guarantee Apple has, is they'll face a critical point like those companies did. Having $200 billion in cash with zero debt, will sure beat having $50 billion in net cash, when that time comes. Apple should know this better than anybody. They nearly went bankrupt 20 years ago, due to their fortunes turning south.

reubenmorais 9y ago

Can you (or someone) expand on this? It's not the first time I hear someone say that big $$$ views debt differently, but I don't understand how.

hn_throwaway_99 9y ago

Can you explain what the benefit of this would be? While I disagree with the parent (if you're sitting on a mountain of cash, debt is not a problem), what would the benefit be of having debt when you also have a mountain of cash? Certainly made sense before when Apple had cash overseas that they couldn't touch, but what would the benefit of it be now?

jlmorton 9y ago
There have been major tax advantages. The impact is lessened by the recent tax reform, but consider Apple has hundreds of billions of dollars in wholly-owned offshore subsidiaries. Up until recently, if they repatriated that cash, they had to pay 35% in taxes. Much better then for an Aa1-rated company like Apple to take out debt at a very low interest rate.
pawelk 9y ago
As I understand it, it would be similar to the situation when my savings account gives me 2% annually and I was able to take a loan at 1% annually. I wouldn't use my savings to pay off the debt, but the other way around.

adventured 9y ago

You're talking about the present. I'm talking about paying down debt now, because the really good times never last. You tightly constrain - or ideally eliminate - the debt now so that when the challenging times inevitably arrive, you have far more flexibility. See: GE, Sears, US Steel, Alcoa, GM, Xerox, Eastman Kodak, Kmart, IBM. All former giants that were laid low. The only guarantee Apple has, is they'll face a critical point like those companies did. Having $200 billion in cash with zero debt, will sure beat having $50 billion in net cash, when that time comes. Apple should know this better than anybody. They nearly went bankrupt 20 years ago, due to their fortunes turning south.