Apple Conference Call: Analyst Talks Apple Debt Issuance, Summer Turnaround

Apple Conference Call: With things in Cupertino seemingly getting worse by the day, Apple Inc. (NASDAQ:AAPL) has a lot to figure out in the near term.

From an investor’s point of view, things are going to clear up a bit on Tuesday when Apple Inc. (NASDAQ:AAPL) holds its FY 13 Second Quarter Results Conference Call.

Investors are showing a lot of concern, some of which is related to increased competition, by the likes of Samsung, for example, as well as uncertainty over what its sales numbers are going to show for the second quarter. And of course, investors are always concerned with the next big thing. When is Apple going to announce a new iPhone? What about news regarding Apple TV or an iWatch?

Apple Inc (AAPL)While investors continue to think about Apple Inc. (NASDAQ:AAPL) giving back some of its cash hoard in the form of a dividend, J.P. Morgan hardware analyst Mark Moskowitz has mentioned in this note that a “large debt issuance” could be next:

“In our view, we think that Apple could be on the brink of driving a major leveraging up. With the company’s cash pile growing and historically low borrowing rates, we think that investors should start to consider what the expanded cash uses could be if Apple takes on $15 billion, if not $20-25 billion, in unsecured debt in the near to mid term. Given the company’s strong operating profit and cash flow metrics, we would expect Apple’s borrowing rate to be 2.5% to 3.0%, which is much better than paying 25-30% tax on cash repatriation.

Recall, 69% of Apple’s cash is held overseas. Overall, we think that a more shareholder-friendly capital allocation program could recast Apple to a wider range of investors. In this report, we present our comparison of “Current Apple” versus “New Apple” assuming the company issues $15 billion in debt in C2013. We estimate that the dividend yield in the “New Apple” scenario could increase to 4.0% versus 2.6% currently, and the stock repurchase activity could nearly double from current levels.”

Right now, Apple Inc. (NASDAQ:AAPL) is the tech company that finds itself facing an uphill battle. This is not what investors want to see, but everybody, even the perceived giant of the industry, has to take its lumps from time to time.

Moskowitz feels that Apple could find itself in better position this summer, especially if other tech companies “hit a wall.”

We think tech stock valuations, in general, have improved more than fundamentals, implying a correction could be in the making later this summer. In such a case, the set up for Apple could start to improve as the restoration of the “what’s next?” likely returns to the story at about the same time other tech companies start hitting a wall with respect to consensus expectations. We think that this inflection point could be in the summer as the Jun-Q earnings season potentially delivers another ho-hum update. At that time, we think that investors could exit lower-quality stocks that have benefited from the risk-on trade recently.”

Apple Inc. (NASDAQ:AAPL) may have more than that at its back this summer, considering the fact that the company is due to release its next generation iPhone. Along with this, many expect a more affordable smartphone to hit the market this year as well. You can never underestimate the power of a new release, especially from Apple.

For now, everybody needs to sit tight until Tuesday evening. By that point, after the second quarter results are released, it will be more clear as to what the future holds.

Check back here for more updates on Apple Conference Call.

For more news stories, visit these pages:

Apple Inc. (AAPL), Microsoft Corporation (MSFT), Best Buy Co., Inc. (BBY): A Fool Looks Back

Apple Inc. (AAPL): The Walt Disney Company (DIS) Is Going to Crush Cable

Apple Inc. (AAPL) Just Made Two Terrible Mistakes