With a thirty-year bond yield, Apple enters corporate adulthood

Take off the pullover and put on a suit and tie – you aren't a tech stock anymore.

Last week saw Apple turning a final corner in its long development as a company. It is no longer just a tech stock – it's now a boring old blue-chip.

During its quarterly earning earnings call, the company increased its dividend by 15 per cent (it will now pay $3.05 a share every quarter), boosted the size of its share buyback plan sixfold, to $60bn, and, most interestingly, announced a bond issue to pay for it all. The company now intends to return $100bn in total to its shareholders by the end of 2015.

Today, Apple filed its draft prospectus for the bond issue with the SEC, confirming the durations it will be borrowing for and the banks in charge. Goldman Sachs and Deutsche Bank will be jointly overseeing the issue, which is of sets of two floating rate notes, due in three and five years, and four fixed-rate notes, in durations of up to thirty years. That's barely shorter than the entire lifespan of the company to date, making the investment a real punt in the dark for anyone buying into it.

We don't yet know how much of each duration Apple is planning to borrow, nor – crucially – the rates they are offering. But the plan looks likely to have very little to do with the typical reasons for corporate borrowing: Apple still has an enormous pile of cash, which means that investment isn't the name of the game.

Instead, the company appears to be using its extraordinary creditworthiness – as well as the ultra-low bond yields which are a sign of our times – to overcome an issue it has with that cash pile: most of it is kept overseas.

The US only charges tax on cash which has been "repatriated", so while Apple leaves money from overseas operations overseas, it doesn't have to pay any tax on it. It's waiting – as it has been for years, now – for a "repatriation holiday", when it hopes a future government will temporarily lift that tax to encourage the companies to bring cash home. Until then, if it needs money domestically, borrowing is as good as any other method. And if its rates are low enough, it might even make a bit of money on the deal.

But with dividends, bond yields, and share buybacks, Apple has entered a new – and dull – stage in its corporate progression. These aren't the actions of a high-growth tech stock; they're those of a company bedding in for the long-haul. Apple expects to be here in thirty years, and still be largely the same when it is, and its asking investors to bank on that. Fun for them, but the white-knuckle days are over for us.

Apple CEO Tim Cook at a presentation for the company. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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PMQs review: Jeremy Corbyn prompts Tory outrage as he blames Grenfell Tower fire on austerity

To Conservative cries of "shame on you!", the Labour leader warned that "we all pay a price in public safety" for spending cuts.

A fortnight after the Grenfell Tower fire erupted, the tragedy continues to cast a shadow over British politics. Rather than probing Theresa May on the DUP deal, Jeremy Corbyn asked a series of forensic questions on the incident, in which at least 79 people are confirmed to have died.

In the first PMQs of the new parliament, May revealed that the number of buildings that had failed fire safety tests had risen to 120 (a 100 per cent failure rate) and that the cladding used on Grenfell Tower was "non-compliant" with building regulations (Corbyn had asked whether it was "legal").

After several factual questions, the Labour leader rose to his political argument. To cries of "shame on you!" from Tory MPs, he warned that local authority cuts of 40 per cent meant "we all pay a price in public safety". Corbyn added: “What the tragedy of Grenfell Tower has exposed is the disastrous effects of austerity. The disregard for working-class communities, the terrible consequences of deregulation and cutting corners." Corbyn noted that 11,000 firefighters had been cut and that the public sector pay cap (which Labour has tabled a Queen's Speech amendment against) was hindering recruitment. "This disaster must be a wake-up call," he concluded.

But May, who fared better than many expected, had a ready retort. "The cladding of tower blocks did not start under this government, it did not start under the previous coalition governments, the cladding of tower blocks began under the Blair government," she said. “In 2005 it was a Labour government that introduced the regulatory reform fire safety order which changed the requirements to inspect a building on fire safety from the local fire authority to a 'responsible person'." In this regard, however, Corbyn's lack of frontbench experience is a virtue – no action by the last Labour government can be pinned on him. 

Whether or not the Conservatives accept the link between Grenfell and austerity, their reluctance to defend continued cuts shows an awareness of how politically vulnerable they have become (No10 has announced that the public sector pay cap is under review).

Though Tory MP Philip Davies accused May of having an "aversion" to policies "that might be popular with the public" (he demanded the abolition of the 0.7 per cent foreign aid target), there was little dissent from the backbenches – reflecting the new consensus that the Prime Minister is safe (in the absence of an attractive alternative).

And May, whose jokes sometimes fall painfully flat, was able to accuse Corbyn of saying "one thing to the many and another thing to the few" in reference to his alleged Trident comments to Glastonbury festival founder Michael Eavis. But the Labour leader, no longer looking fearfully over his shoulder, displayed his increased authority today. Though the Conservatives may jeer him, the lingering fear in Tory minds is that they and the country are on divergent paths. 

George Eaton is political editor of the New Statesman.

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