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10-02-2013, 03:17 PM #1
Apple Reported to be Holding 10% of all US Corporate Cash
Apple’s $147 billion in reserves accounted for 10% of all companies, of the $1.48 trillion in cash held by US non-financial companies as of June 30 according to recently released data. The analysis conducted by Moody’s and summarized by The Wall Street Journal, reveals that Apple’s share of US corporate cash from 9.5% at the end of 2012 to 10% in mid-2013. Apple’s cash hoard seems to be the subject of considerable debate as some investors believe that the company should be doing more with its money.
Although Apple has the largest share by far, together Microsoft, Google, Cisco and Pfizer account for another 15% of all US corporate reserves. Moody’s data shows that the top 50 companies account for 62%. It has been several years since Apple has been flush with billions that it can’t spend fast enough. The company announced plans for a dividend program in March of 2012, along with a $10 billion share buyback program. These plans were expanded this year when Apple CEO, Tim Cook, announced expanded buyback and dividend plans that will distribute $100 billion from its cash pile through 2015.
Even with its aggressive plans, Apple’s cash continues to grow faster than the company can spend it. Its domestic and overseas funds reached $146.6 billion by the end of this year’s June quarter. This in result has drawn attention of billionaire investor Carl Icahn, who has begun pushing Apple to spend $150 billion and buy back even more of its own shares. Icahn had pitched his plan to Cook and Apple CFO Peter Oppenheimer at dinner in Manhattan this past week in a conversation that he admitted got “testy” at times.
We’ll have to see how Apple conducts its business going forward.
Source: The Wall Street Journal
10-02-2013, 10:33 PM #2
Good thing Cisco just laid off another 4,000 people.
10-03-2013, 09:59 AM #3
Apple and these other companies do need to reinvest that money into the economy or pay out larger dividends to their stock holders, so that they can put the money back into circulation. This is a lot of money, which would help the economy dramatically.
10-04-2013, 12:05 AM #4
If most of this cash were not overseas it might be easier to spend it stateside. As it sits now for Apple to repatriate its cash would cost them an insane amount in taxes.
From May 2013 Forbes Article
The basic background is that a US corporation only pays US corporate income tax on profits made inside the US, or foreign profits brought back to the US (it’s a little more complex than that but that’s close enough). Given that the US corporate income tax rate is 35%, one of the highest in the world, there’s a certain reluctance on the part of companies to bring their foreign profits back. Park them offshore and don’t pay the 35% seems to be the conclusion of most companies.