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So how are they putting proposal to buyback shares worth of $150B when Apple only has $146 cash pile? Pull everything from the overseas or just borrow from anot

So how are they putting proposal to buyback shares worth of $150B when Apple only has $146 cash pile? Pull everything from the overseas or just borrow from another financial institute? If they opt for borrowing route then is this a good thing or a bad thing for investors? I mean long-term investors. Just curious.

JumpCrisscross 13y ago
The $150 billion figure is misleading - it is the sum of the $100 billion to be returned through December 2015 ($33.5 billion in 2013) and the $50 billion being proposed to be returned to shareholders in fiscal year 2014. Thus, 2014 dividends and share repurchases would be, if the measure passed, about $84 billion. This would come out of the $146 billion cash pile plus the cash Apple would add to the pile in FY 2014. If (a) the rate at which Apple can borrow to repatriate this cash plus (b) the rate Apple expects to earn on its cash is less than (c) the return investors expect they could generate on their cash, i.e. if (a) + (b) < (c), then yes, it makes sense to borrow to return cash to shareholders. Borrowing, in this case, is a transaction cost for skirting U.S. tax law.
Zenst 13y ago
The borrowing route opens up cheaper ways to return the oversea cash piles. If the American divisoon of Apple get a loan from a company with branches in other countries they have cash piles then the possibilities to avoid TAX on that overseas money becomes more open than it currently stands. Either that or it allows them to capitalise upon there cash asset in a way that does not open it up to current American TAX and allows more time until the American TAX system does some amnesty TAX deal for overseas cash Amrican companies have sitting and growing. Not just Apple, many have huge oversea cash piles and TAX laws have changed in the past to accomodate such situations and will probably happen again for a short term cash injection.
- twoodfin 13y ago
  If the American divisoon of Apple get a loan from a company with branches in other countries they have cash piles then the possibilities to avoid TAX on that overseas money becomes more open than it currently stands. How does that work? I would be a little surprised if such a scheme had any effectiveness in reducing U.S. tax liability.
  - deleted 13y ago
    [deleted]
  - Zenst 13y ago
    I'm no TAX expert, let alone multi country TAX laws but from what I understand a company can get a loan, they can get that lkoan in another country which they have a pile of cash sitting and pay that loan off from that money. They could bring that loan money into America as it is not profit as it is debt in a vailed form.

JumpCrisscross 13y ago

The $150 billion figure is misleading - it is the sum of the $100 billion to be returned through December 2015 ($33.5 billion in 2013) and the $50 billion being proposed to be returned to shareholders in fiscal year 2014. Thus, 2014 dividends and share repurchases would be, if the measure passed, about $84 billion. This would come out of the $146 billion cash pile plus the cash Apple would add to the pile in FY 2014. If (a) the rate at which Apple can borrow to repatriate this cash plus (b) the rate Apple expects to earn on its cash is less than (c) the return investors expect they could generate on their cash, i.e. if (a) + (b) < (c), then yes, it makes sense to borrow to return cash to shareholders. Borrowing, in this case, is a transaction cost for skirting U.S. tax law.

Zenst 13y ago

The borrowing route opens up cheaper ways to return the oversea cash piles. If the American divisoon of Apple get a loan from a company with branches in other countries they have cash piles then the possibilities to avoid TAX on that overseas money becomes more open than it currently stands. Either that or it allows them to capitalise upon there cash asset in a way that does not open it up to current American TAX and allows more time until the American TAX system does some amnesty TAX deal for overseas cash Amrican companies have sitting and growing. Not just Apple, many have huge oversea cash piles and TAX laws have changed in the past to accomodate such situations and will probably happen again for a short term cash injection.

twoodfin 13y ago
If the American divisoon of Apple get a loan from a company with branches in other countries they have cash piles then the possibilities to avoid TAX on that overseas money becomes more open than it currently stands. How does that work? I would be a little surprised if such a scheme had any effectiveness in reducing U.S. tax liability.
- deleted 13y ago
  [deleted]
- Zenst 13y ago
  I'm no TAX expert, let alone multi country TAX laws but from what I understand a company can get a loan, they can get that lkoan in another country which they have a pile of cash sitting and pay that loan off from that money. They could bring that loan money into America as it is not profit as it is debt in a vailed form.