Boston, MA 02/26/2014 (wallstreetpr) – Cisco Systems, Inc. (NASDAQ:CSCO) has bolstered its cash balance after selling $8 billion worth of bonds which is a record sale in the current fiscal year, second Verizon $49 billion worth of debt in September last year. The proceeds could not have come at a better time as they will be used for clearing senior notes worth $3.75 billion that are set to mature in the current fiscal year. Part of the money will also be used for stock buybacks and payment of dividends.
The $8 billion bond sale comes at the back of the company announcing back in November last year that it intends to increase its stock buyback program by $15 billion after experiencing below par first quarter earnings. The sale of bonds comes as a surprise to many considering the company had earlier reported cash and cash equivalent worth $47.1 billion, an amount enough to cater for its cash requirements.
Possible reasons behind the bonds offering
Looking at the bigger picture behind the sale of bonds could only mean one thing, the company is planning for a large acquisition that could essentially cripple its cash balance. The other reason behind the sale of bonds could solely lie on the fact that most of the company’s cash balance is currently locked out of the US. Cisco cannot repatriate such a huge amount of money as it will incur huge amounts in tax penalties. Cisco Systems, Inc. (NASDAQ:CSCO) long term debt before the offering of the bonds stood at $13 billion
Cisco systems market ratings
Cisco Systems, Inc. (NASDAQ:CSCO) is currently rated as a “Buy” by TheStreet research firm as the company continues to show strengths in increase in stock price and the growth in profit margins as well as reasonable debt levels.
Cisco Systems, Inc. (NASDAQ:CSCO) was down during Tuesday trading session going down by 1.27% to close the day at lows of $21.84.
