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Old Oct 18, 2011, 06:38 PM   #1
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Tim Cook "Not Religious" About Holding Cash; 66% of Apple's $81B in Cash is Held Overseas




It's a frequent parlor game amongst Apple analysts and watchers to guess and suggest and hypothesize what Apple should do with its huge and growing cash reserves. As of September 24, 2011, Apple is sitting on $81.57 billion in cash. Apple added $5.4 billion to its cash reserves in the last 3 months, and that would have been significantly higher if, as Horace Dediu points out, not for the more than 6,000 Nortel patents Apple purchased the rights to.

To be more precise, Apple CFO Peter Oppenheimer oversees $9.815 billion in cash and cash equivalents, $16.137 billion in short-term marketable securities, and $55.618 billion in long-term marketable securities. In the earnings call with analysts this afternoon, Apple CEO Tim Cook said the cash wasn't "burning a hole in our pocket" and that the company invested very conservatively and didn't want to do "silly things" with the money.




Cook noted that in recent months Apple had acquired several companies, acquired intellectual property, invested in the supply chain, and invested in new stores. In his first comments as CEO about the cash pile Cook said he wasn't "religious about holding or not holding cash," but Apple would continually ask ourselves what is in Apple's best interest and act accordingly.

"It's a topic for the board on an ongoing basis and we will continue to discuss it," Cook said in response to an analyst question. Apple CFO Peter Oppenheimer jumped in after Cook was finished answering the question, to point out that more than two-thirds of Apple's $81 billion cash pile was sitting offshore.

The question of offshore cash is an important one, as explained by Reuters:
Quote:
The U.S. government taxes U.S. businesses on income earned worldwide, but allows them to defer taxes on the money until it is brought back to the United States. As a result, American corporations like to keep the money abroad, particularly as they increase investment overseas.
A number of companies, led by Apple, Google and Cisco have been pushing for a tax holiday on overseas cash holdings to allow the companies to repatriate the money to the United States tax-free.

Article Link: Tim Cook "Not Religious" About Holding Cash; 66% of Apple's $81B in Cash is Held Overseas
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Old Oct 18, 2011, 06:41 PM   #2
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Yup. Apple would have to pay about $12B in taxes if they brought that money into the U.S.
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Old Oct 18, 2011, 06:43 PM   #3
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What I would give for 0.01% of that
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Old Oct 18, 2011, 06:44 PM   #4
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Yup. Apple would have to pay about $12B in taxes if they brought that money into the U.S.
I feel so sad for us Canadians.
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Old Oct 18, 2011, 06:44 PM   #5
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Yup. Apple would have to pay about $12B in taxes if they brought that money into the U.S.
Technically they should but since they are so "we love USA" they prefer to dodge it. Foreign banks, investments firms, lawyers make money on it yet USA only spends more so apple (NOT ONLY apple to make it clear so no idiot starts another stupid argument) can give others a chance of benefiting from it... Awesome how it all works
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Old Oct 18, 2011, 06:44 PM   #6
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It's too bad that the American tax system incentivises not bringing the money back into the United States.
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Old Oct 18, 2011, 06:46 PM   #7
bruinsrme
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Every company does this.

Intel created a separate entity for their fab in Massachusetts. If they hadn't intel would have had to pay taxes to this overtax welfare state on their entire income.
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Old Oct 18, 2011, 06:46 PM   #8
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It's too bad that the American tax system incentivises not bringing the money back into the United States.
So you would rather they not pay taxes on earnings?
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Old Oct 18, 2011, 06:46 PM   #9
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Funny how the U.S. can tax revenue that never actually existed in the U.S. Gotta love "repatriation!"
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Old Oct 18, 2011, 06:47 PM   #10
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This is getting to the level of a Gibson-like "megacorporation." So when will Apple start making sovereign territory claims?
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Old Oct 18, 2011, 06:48 PM   #11
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Every company does this.

Intel created a separate entity for their fab in Massachusetts. If they hadn't intel would have had to pay taxes to this overtax welfare state on their entire income.
We all tout Apple as a company that revolutionizes everything they touch... maybe it's time for Apple to not be "every company" in terms of bringing money back to the US economy?
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Old Oct 18, 2011, 06:49 PM   #12
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nailed it...

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Originally Posted by hobo.hopkins View Post
It's too bad that the American tax system incentivises not bringing the money back into the United States.
Yep, sadly, as long as that is still in place they'll be no real push for "Made in the USA" products by the corporate big-wigs.
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Old Oct 18, 2011, 06:50 PM   #13
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Every company does this.

Intel created a separate entity for their fab in Massachusetts. If they hadn't intel would have had to pay taxes to this overtax welfare state on their entire income.
You have that right. This is where big time CPA and corporate tax attorneys make their dime. Surprised that Apple is not hardhearted in Delaware like other big valley companies are these days. Then when you go international, there are small European countries and small island states that have good tax deals. Just waiting for privately owned space stations in orbit starting to make sovereign claims becoming tax shelters.
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Old Oct 18, 2011, 06:50 PM   #14
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So you would rather they not pay taxes on earnings?
They're not paying it now, anyway.

Last edited by bruinsrme; Oct 18, 2011 at 06:59 PM.
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Old Oct 18, 2011, 06:52 PM   #15
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So you would rather they not pay taxes on earnings?
Did I say that? I just said that it's a shame that the tax system doesn't incentivise bringing back money from overseas. Incentives could be a temporary lower rate to provide instant benefits, for example. I didn't say they shouldn't pay any taxes; I believe that's creating a false dilemma.
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Old Oct 18, 2011, 06:53 PM   #16
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They could spend some of that on building an apple store closer to me.
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Old Oct 18, 2011, 06:54 PM   #17
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I don't know why this is even a story. Cook didn't say anything that hasn't come out of Apple before. At least you didn't bring up speculation on a dividend.
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Old Oct 18, 2011, 06:54 PM   #18
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This discussion is going to turn ugly soon so I will refrain from commenting.
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Old Oct 18, 2011, 06:55 PM   #19
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Originally Posted by mingoglia View Post
We all tout Apple as a company that revolutionizes everything they touch... maybe it's time for Apple to not be "every company" in terms of bringing money back to the US economy?
Let them bring the money back in tax-free. Companies aren't going to pay taxes on it if it's left overseas. Bring it back tax-free and let them invest into America.
I guess it comes down to a potential win for the country or a hand out to the government.
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Old Oct 18, 2011, 06:55 PM   #20
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All of this money was earned overseas, ex. China sales. Why should Apple pay US tax for goods made and sold in China? The net effect is that the money stays offshore and never gets invested back into the US. A disaster of a tax system.
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Old Oct 18, 2011, 06:57 PM   #21
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Why pay the 12 big ones to our Govt? They will just stimulate a few ill conceived green energy initiatives, bail out a bank, or get a new campaign bus from Canada (sorry McFrankshe). Just use it to delevop a smaller iPad.
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Old Oct 18, 2011, 06:58 PM   #22
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This discussion is going to turn ugly soon so I will refrain from commenting.
You got that right. So many here believe in taxing the heck out of anything that moves
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Old Oct 18, 2011, 06:58 PM   #23
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Apple should build a car. If someone built a car as well as apple built this computer, I'd be happy as a clam.


...Apple should not get into building cars.
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Old Oct 18, 2011, 06:58 PM   #24
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Crap like this is why america is broke, among other reasons. Apple should really set a standard of investing here in USA. Kinda sad IMO.

I think most would be happy with $360 apple stock prices if apple brought cash back to USA.
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Old Oct 18, 2011, 07:00 PM   #25
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Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A334 Safari/7534.48.3)

All of this money was earned overseas, ex. China sales. Why should Apple pay US tax for goods made and sold in China? The net effect is that the money stays offshore and never gets invested back into the US. A disaster of a tax system.
This.

They already paid taxes once on the money they earned to the country in which it was earned. It's not unpatriotic to not want your earnings double dipped.
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