Bloomberg News

U.S. Technology Companies May Double Overseas Cash, Moody’s Says

June 27, 2011

June 27 (Bloomberg) -- The amount of cash major U.S.-based technology companies hold overseas may almost double in the next three years to $238 billion, Moody’s Investors Service said today in a report.

Companies including Apple Inc. and Microsoft Corp. have kept their cash overseas to avoid paying as much as a 35 percent U.S. repatriation tax on their earnings. The 11 companies in the report hold an average of 73 percent of their cash overseas, and Moody’s predicts that number will increase to 79 percent by 2014.

Microsoft, based in Redmond, Washington, holds $42 billion overseas, or 84 percent of its cash and short-term investments, the most by dollar value of any company in the report. Apple, in Cupertino, California, has $40.2 billion in overseas dollars, 61 percent of its cash and short-term investments, an almost sixfold increase from 2006, Moody’s wrote. Oracle Corp., in Redwood City, California, has 90 percent of its cash and short- term investments overseas, about $21.9 billion, which is the highest percentage among the 11 companies in the report.

The Moody’s report comes as companies including Apple push for a tax break to bring their dollars home. The companies say a tax cut for repatriated cash could help create domestic jobs. Moody’s does not expect tax laws to change in the short term, the analysts wrote in the report.

“There has been a lot of noise but little movement toward corporate tax reform that would incent companies to permanently repatriate overseas funds,” wrote the Moody’s analyst, Richard Lane. “Given the political cycle and strong differences on both sides of the aisle in Washington, we do not anticipate any material tax law changes over the near term.”

--Editors: Donna Alvarado, John Lear

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles@bloomberg.net.


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