Tiernan Ray reports for Barron’s, “Apple stands to benefit the most from any U.S. tax holiday on overseas cash, writes Morgan Stanley’s Katy Huberty.”
Apple, with $216B of cash held offshore (or 37% of market cap), is the largest beneficiary and would likely pay $54B less in taxes should a repatriation holiday occur and they decide to move all their cash onshore. This would give Apple a significant amount of accessible dry powder to potentially make a sizable acquisition, boost returns to shareholders, pay down debt or do all of the above. It would likely also remove an overhang on the stock that has been in place for many years. Other companies with large offshore cash balances that could potentially step up M&A activity or return cash to shareholders (Exhibit 1)? NTAP (offshore cash is 43% of mkt cap), HPE (26%), HPQ (21%), WDC (17%) and IBM (6%). Collectively, these six companies could save over $61B in taxes, or 25% of their current offshore cash balance, with a 10% repatriation holiday. — Morgan Stanley analyst Katy Huberty
Read more in the full article here.
MacDailyNews Take: The implementation of a new U.S. corporate tax structure for modern times would be far better than a one-time tax holiday.
Again, let’s not do another “one-time-only” (smirk) repatriation holiday. Let’s fix the broken U.S. corporate tax code instead. Let us eschew the easy way out, that fixes nothing in the long run, and choose to do the hard work instead (for a change). — MacDailyNews, September 2, 2016