In '97, Bill Gates helped his old frenemy, Steve Jobs, by purchasing
$150M of AAPL stocks. Here are my questions about this transactions.
1. Why couldn't AAPL allow the general public to buy $150M worth of
non-voting shares, but instead he went to only one entity - MSFT - for
this financial lifeline? This is pricing discrimination, because our
price is $INFINITY and MSFT's price was $150M.
2. When MSFT bought $150M worth of AAPL shares in '97, did they buy
from the secondary market or did they buy from a new offering? These
shares were non-voting anyways.
3. Why didn't AAPL issue$150M worth of high-yielding bonds to MSFT?
This would have had more stability, paid a higher-than-normal yield,
would have been tax favorable to AAPL, and they are also a non-voting
investment in MSFT.
4. Finally, how does a company "issue shares towards prosperity"? This
dilutes EPS and just doesn't make sense to me. This is what doesn't
make sense specifically: If a distressed company issues $100M of
shares, then that distressed company's new business model is to simply
issue shares and some C-level executives (i.e. CEO, COO, etc.) and i-
Bankers get rich. But the new shareholders lose value over time. Their
investment in a distressed company is bad. How do you issue your way
5. What effect would it have had if MSFT bought $150M worth of stocks
in the secondary market (from the NYSE or NASDAQ exchange)?
- posted 8 years ago