Dissension Within Apple's Investor Base

Last week, Apple (NASDAQ: AAPL  )  tapped the debt markets for the first time, offering $17 billion in bonds to bolster its domestic cash position. Selling all that paper dramatically altered the company's capital structure, which will only continue shifting as Apple uses those funds to begin aggressively repurchasing its own shares.

In the process, Apple also broadened its investor base in a whole new way. Before, Apple's investor base consisted solely of equity investors. Income investors looking for a piece of the Mac maker could previously only purchase shares for the 2.7% dividend yield. Now, Apple is welcoming bond investors with open arms.

Here's the thing: There's dissension within these two classes of investors.

On the equity side, shareholders have gotten particularly rattled over the past six months. Look no further than the 45% decline in prices between September and April as evidence of that. Equity investors have been fretting over a wide range of concerns, including growth deceleration and margin contraction, among others.

There have also been doubts about Apple's long-term prospects due to the fact that Apple relies heavily on continued product innovation to constantly feed the top line. Investors have come to expect a string of revolutionary products from Apple to follow the iPod, iPhone, and iPad, but the success of any such future devices is largely uncertain.

On the debt side, investors are far less concerned. The longest maturity included in the offering goes all the way out to 2043. That's 30 years from now. Talk about a vote of confidence in Apple's long-term prospects and cash flow. To put that time frame into context, all three of Apple's major breakthrough products have occurred within the past 12 years. When talking about a 30-year time horizon, Apple would need at least a handful of revolutionary products to keep it going that long.

In the short time that those notes have been on the market, they've reached a price as high as 103.85, which implies that debt investors aren't overly concerned with Apple's business prospects. That also indicates that there's considerable interest in the credit markets for Apple's debt. In fact, the total order book had reportedly reached up to $50 billion, so Apple could have theoretically raised more if it wanted to.

While equity investors remain worried about the next couple years, debt investors are good to go for the next three decades.

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