Marvell Technology Group Ltd. (MRVL), Apple Inc. (AAPL): Einhorn Is Bullish

Microsoft Corporation (NASDAQ:MSFT)’s bond yield is similar to Apple’s

What makes Apple’s bond issuance more interesting is that Apple had the same debt-financing yield with Microsoft Corporation (NASDAQ:MSFT) even though it had a lower credit rating than Microsoft. Because of the risk of “shifting consumer preferences,”  Moody’s ranked Apple at Aa1, a level below its top investment grade. Rationally, if Apple was ranked at a lower grade than Microsoft, its bond should have offered higher yields. Nevertheless, Microsoft had also issued nearly $2 billion worth of bonds maturing in three years, 10 years and 30 years. The yield on those bonds stayed in the range of 1.013% to 3.828%.

Microsoft also spent a huge amount of capital expenditure on R&D activities. In the past five years, its R&D spending accounted for 12.93% to 15.42% of the total revenue. In the past 12 months, the company spent more than $10.2 billion in R&D. Microsoft also had a big chunk of cash. As of March 2013, it had $76.7 billion in equity, $85.6 billion in cash and investments and more than $14 billion in debt. Microsoft is trading at $33 per share, with the total market cap of $273 billion. The market values Microsoft at 7 times EV/EBITDA. Apple is a bit cheaper with 6.8 times EV/EBITDA.

My Foolish take

Income investors might now consider Apple as a dividend-paying stock with a decent yield. At the current trading price, Apple offers 2.6% dividend yield while Microsoft’s dividend yield is a bit higher at 2.8%. Marvell Technology also pays dividend with the lowest dividend yield at 2.2%. I think all of those three big technology stocks could do well for investors in the long run.

The article David Einhorn Is Bullish on These Two Tech Stocks originally appeared on Fool.com and is written by Anh HOANG.

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