Microsoft makes its biggest sale ever, sees Apple as key to success

Microsoft hit jackpot on Thursday after it made US$13 billion (AU$18.31 billion) from the bond market. The sale is the biggest of its kind for the company during the busiest session of the month--not to mention the period is also for high-grade issuers. As the tech giant continues to make headlines, analysts suggest that part of Microsoft's recent successes is its acceptance that Apple's business model does work.

The seven-part deal dates back eight months ago as part of Microsoft's bid to raise money to settle existing debt and repurchase stock. According to Bloomberg, the company sold its longest portion, which is a 40 year bond linked to a 1.8 percent yield over similar government debt. Additionally, the company's 10 year notes sold for US$3 billion (AU$4.22 billion) at a 0.18 percentage spread over comparable maturity debt in the secondary market.

“This is a banner year for tech issuance, so they needed to price wide to get people to take down $13 billion,” Bloomberg quoted CreditSights Inc. analyst Jordan Chalfin in an interview. “For Microsoft, an extra five-10 basis points doesn’t really matter. Their debt-funded share buybacks are very accretive for equity holders.”

This comes on top of Microsoft's recent successes as the tech market refocuses its attention on the company. The company's release of the Surface Book along with other mobile products got the market buzzing with some analysts saying that the firm has stepped up finally.

For many years, Microsoft remained an OS company offering software to computers. Eventually it transformed into a software applications company, dabbling in production of computer components like keyboards and mice. Microsoft soon faced bigger contenders with Apple acing the race. It did not help that the company decided to put the fate of its software on its PC partner. For the time being, it was right but not for long.

In an essay by Tim Bajarin, he explained why Microsoft has found its mojo once more.

"If you look at Microsoft’s new strategy, you can’t help but see that this is an acknowledgment that Apple’s business model of owning the hardware, software and services is ultimately the best one to assure Microsoft’s control of its own destiny," the executive wrote. Surface Book has received praises but it may take longer to see how Microsoft's new strategy pans out in the long run. Nonetheless, forecasts appear more optimistic.

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