Apple Inc. (AAPL), Microsoft, Google, Cisco Systems and Oracle — Have Cash Reserves of $430.3 billion at the end of 2014 says Moody’s
Technology giants that include Apple Inc. (NASDAQ:AAPL) and Oracle Corporation (NYSE:ORCL) have a cash stockpile of more than $430 billion, most of which is held in foreign accounts. Moody’s revealed the details in its latest report, which captures the companies’ cash holding as of the end of 2014.
In addition to Apple and Oracle, the other technology names with massive cash piles are Google Inc (NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT), and Cisco Systems, Inc. (NASDAQ:CSCO).
Apple Inc. (NASDAQ:AAPL) has the largest amount of cash pile at $178 billion, with 89% stashed in offshore accounts. Microsoft has $90.2 billion in a cash hoard, with 91% in held overseas. Google has $64.4 billion, with just 60% in overseas accounts. Cisco has $53 billion of a cash pile, but keeps 94% of that money overseas. Oracle has $44.7 billion in a cash hoard, with 90% stashed abroad. In all, the five companies have $430.3 billion in their stock piles.
Technology companies have continued to account for most of the corporate cash pile, with the portion rising to 56% in a span of five years and the trend is expected to continue.
Avoid hefty taxes
Moody’s expects continued accumulation of cash among technology companies despite many of them moving to bolster capital returns to shareholders. What is happening is that technology companies with overseas businesses are choosing to keep their cash in offshore accounts. The idea behind that is that they are trying to avoid the 35% corporate tax that would apply on their repatriated cash.
Using debt to meet cash needs
In recent times, some of these companies have been turning to the debt market to raise cash, which is way cheaper than repatriating offshore cash.
It is easy for Apple Inc. (NASDAQ:AAPL) and its peers to keep large amounts of cash abroad because they don’t have to pay tax on it as long as they don’t bring it back home and reinvest.
Tax breaks mooted
There have been recent attempts to try and entice U.S. companies keeping their cash in offshore accounts to bring them back home. Towards that end, one-time tax breaks have been mooted, but Moody’s cited that policy change to allow such tax breaks was unlikely given the current arrangement of things in Washington.
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