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Escalating expectations at Apple

Apple already pays owners of its stock more than $3 a year in dividends. The new bonds, and any new or upgraded devices, increase investor expectations of future payouts and profits.
Apple already pays owners of its stock more than $3 a year in dividends. The new bonds, and any new or upgraded devices, increase investor expectations of future payouts and profits.

The first full week trading week of September belongs to Apple.

For many years, the company has used early September to wow customers and dazzle investors. It introduced its iTunes store, the original Apple Watch and multiple generations of iPhones at its annual September event. Apple fans and shareholders have grown accustom to witnessing the latest innovation that could promise to power future profits.

This year’s event will be Tuesday in the week ahead.

On Tuesday, the iPhone 11 is expected to be unveiled with three different models. Apple aficionados think the new phones will have upgraded semiconductors, cameras and Face ID system. There are rumors of a new Apple Watch, and investors want to hear more about Apple TV and the company’s subscription video service.

Watches and video are important to future profits. Sure, the iPhone remains its biggest sales generator, responsible for almost half of its revenue in the most recent quarter. Yet, the fastest growing unit is Apple’s wearables, home and accessories division. Sales jumped 48 percent in the past year. A new watch, or Apple TV device will be key to continuing this trend.

Then, there’s the announcement of “one more thing” that was regularly slipped into its September event by former CEO Steve Jobs to such great effect.

For investors, that “one more thing” came early. Days before its device event, Apple filed paperwork to borrow as much as $7 billion in bonds ranging for three to 30 years. The company has over $200 billion in cash. It wants to borrow money at record low interest rates to spend the money on a number of items, including buying back its stock and paying shareholder dividends.

The company already pays owners of its stock more than $3 a year in dividends. The new bonds, and any new or upgraded devices, increase investor expectations of future payouts and profits.

Tom Hudson hosts “The Sunshine Economy” on WLRN-FM, where he is the vice president of news. Twitter: @HudsonsView

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