Tech Firms Turn to Debt
A growing number of technology companies are turning to debt to raise capital, taking advantage of the thawing credit markets to build their war chests in anticipation of a wave of dealmaking.
Software companies including SAP AG (SAP), Adobe Systems Inc. (ADBE) and Salesforce.com Inc. (CRM) have recently raised several billion dollars by selling debt for the first time in their histories. The moves follow similar offerings over the past year from cash-rich giants like Microsoft Corp. (MSFT), which had $25 billion in cash when it took on debt for the first time last May.
The decision to take on debt breaks from tradition in tech, where companies have typically preferred to raise money by selling stock. Debt has become a more attractive fundraising option largely because interest rates are low.