Now that Goldman Sachs has succeeded in its mission of helping Apple fend off David Einhorn’s demand that it raise a two hundred plus billion dollars of preferred stock, I guess it’s time for someone at Goldman to sit down with Apple and say “now, guys, really, you ought to think about raising two hundred billion dollars of preferred stock, it’s just the sensible thing to do.” Or something. This debt-financed share-buyback plan doesn’t sound like too much fun for the bankers:
On April 23, Cupertino, California-based Apple said it would return an additional $55 billion in cash to shareholders to compensate for a stock that’s dropped on signs that the company’s growth is slowing. Although it has $145 billion of cash, Apple said it will use debt to help finance a total capital reward of about $100 billion to shareholders. …
Because investment-grade debt offerings typically pay low fees, banks may offer to do the transaction for little or no charge, [Sanford Bernstein analyst Brad] Hintz said.
“This is going to be a prestige-per-share, not an earnings-per-share, deal,” said Hintz, who worked as Morgan Stanley’s treasurer and as the chief financial officer at Lehman Brothers Holdings Inc. earlier in his career. “We’re really talking about a deal that’s going to be done as close to gratis as you can get.”
The amount Apple will be raising is a little unclear but $50 billion over the next three years is … possible? Maybe?1Read more »
I’m beginning to get the hang of how Deutsche Bank works, which seems to be:
When they lose money, that strengthens their capital position, and
When they make money, that weakens their capital position, requiring them to sell shares.
Maybe? Three months ago we talked about how … well, I said “Deutsche Bank Improved Its Balance Sheet By Losing A Lot Of Money,” which I guess seemed funnier at the time, but to be fair (1) Bloomberg said “Deutsche Bank ‘took pain’ in the quarter by booking a loss to boost its capital ratio without selling shares,” which is about equally funny or unfunny, and (2) Deutsche did in fact have a 4Q loss of €2.2bn and yet increased its Tier 1 capital ratio by 90bps.
Today, on the other hand, Deutsche pre-announced – good! positive! €1.7bn! – first-quarter earnings and also:
The Management Board of Deutsche Bank AG resolved today, with the approval of the Supervisory Board, to execute a capital increase, which is intended to raise gross proceeds of approximately EUR 2.8 billion. The purpose of the capital increase is to strengthen the equity capitalisation of the bank. Read more »
Hedge fund manager Phil Goldstein once said that when Massachusetts Secretary of the Commonwealth Bill Galvin looks in the mirror in the morning, he sees Eliot Spitzer. Granted, he said this before certain aspects of Client Number Nine’s private life hit the front pages, but the point was made.
And while Spitzer moves from one failed media venture to another—undoubtedly paying very close attention to a certain South Carolina House race—Galvin still carries the torch and a copy of the Bay State’s securities law. That law must be unusually broad, because he’s used it to fine a German bank $17.5 million for naughtiness related to a CDO created with an Illinois-based hedge fund. Read more »
Disgraced though HSBC may be, what with the $4 billion-plus it paid in fines to regulators last year, and the 17% drop in profit that entails, the old Hongkong and Shanghai Banking Corp. managed to shrink less than its friends in Frankfurt in an unusual race backwards, thereby dethroning the Germans as Europe’s largest bank. Read more »