A Company with AAA credit like MSFT is borrowing long term at great rates. $3.75 billion dollars in three terms of 5, 10 and 30 years at less than 1% above treasury bonds at the same maturity.
Why?
$15 billion of orders came in with MSFT only trying to sell $3 bill.
With over $25 billion in cash and equivalents, MSFT doesn’t need the money.
Its a public relations show to prove several things:
1) MSFT has a good business model, the industry’s best management team,
2) products that have great marketplace acceptance, better than industry assets. In addition, they are taking money away from weaker competitors and positioning themselves for acquisition spree in this weaker economy.
So the marcomm benefit of the interest costs are being paid to bondholders over up to 30 years while they set the table for the company’s next “big thing” while taking the air out of the other players in the industry.
Every business needs advisors to create this type of marketing coup whether it is suddenly asking for deposits for new products, the funding for which will come from the deposits, or introducing new brands or brand extensions. The publicity and buzz needs to involve a detailed marketing plan for the next direction with the engineering provided outside the company to make it happen stealthily and dramatically.
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