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S&P |

Apple Inc. Assigned 'AA+' Corporate Credit Rating; Outlook Stable

Publication date: 23-Apr-2013 16:45:15 EST



  • Apple Inc. recently announced that it will return a total of $100 billion to shareholders through the end of calendar year 2015, more than double the level of shareholder returns announced in March 2012.
  • Apple indicated that its shareholder return plan will include the use of debt to repurchase shares.
  • We are assigning our 'AA+' corporate credit rating to Apple.
  • The stable outlook reflects our expectation that Apple will maintain very modest leverage, significant net cash balances and a commitment to a minimal financial risk profile.

NEW YORK (Standard & Poor's) April 23, 2013--Standard & Poor's Ratings 
Services today assigned its 'AA+' corporate credit rating to Cupertino, 
Calif.-based Apple Inc. The outlook is stable. We anticipate that we would 
also assign this rating to unsecured senior debt that may be issued as part of 
the shareholder return program, subject to review of the documentation.

"The rating on Apple reflects the company's 'minimal' financial risk profile 
and 'strong' business risk profile, incorporating market-leading products, a 
globally diverse customer base and strong profitability," said Standard & 
Poor's credit analyst Martha Toll-Reed. Although the majority of Apple's 
revenues are generated in highly competitive markets characterized by rapid 
technology evolution and short product life cycles, it is our view that 
Apple's managerial and product innovation capabilities will enable the company 
to sustain its competitive position. Furthermore, it is our expectation that 
Apple will maintain "excellent" liquidity, which provides substantial cushion 
to offset the potential for some volatility in revenue growth and operating 
earnings.

With annual revenues of $165 billion in calendar 2012, Apple is the largest 
U.S.-based provider of mobile devices, personal computers, and related 
products and services. Apple has been an industry leader in the growth of, and 
market shift to, internet-connected mobile devices (which include smartphones 
and tablets). The company's core values of innovation, quality product, and 
quality user experience provide its competitive differentiation. Revenues and 
earnings are concentrated in iPhone and iPad sales, which accounted for more 
than 75% of revenues in the December 2012 quarter. However, Apple generates 
sustained customer interaction through an expanding array of content and 
service offerings, and benefits from significant customer loyalty. We believe 
that this, along with its track record of innovation and successful new 
product development, distinguishes Apple from other consumer device and 
electronics firms that were unable to sustain their market leadership 
positions in these rapidly evolving markets. In our assessment, Apple's 
management and governance is "strong," based on the company's track record of 
market leadership, effective innovation, and successful performance in 
relation to its peers.

The stable outlook reflects our expectation that Apple will maintain modest 
leverage, significant net cash balances, and a commitment to a minimal 
financial risk profile. While not expected, the most likely cause of a 
downgrade would result from competitive market conditions that cause a 
material decline in operating performance and discretionary cash flow, leading 
to a substantial decline in Apple's net cash position. The potential for an 
upgrade is currently constrained by our view of Apple's business risk profile, 
which incorporates highly competitive and rapidly evolving market conditions 
and Apple's earnings vulnerability to a potential delay in, or modest success 
of, new product introductions. Therefore, an upgrade would likely depend upon 
an upward revision to our view of Apple's business risk profile to 
"excellent," while maintaining a minimal financial risk profile.


RELATED CRITERIA AND RESEARCH

Complete ratings information is available to subscribers of RatingsDirect at 
www.globalcreditportal.com and at www.spcapitaliq.com. All ratings affected by 
this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.

Primary Credit Analyst:Martha P Toll-Reed, New York (1) 212-438-7867;
molly_toll-reed@standardandpoors.com
Secondary Contact:Philip L Schrank, New York (1) 212-438-7859;
phil_schrank@standardandpoors.com

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