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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:
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.

Top Rated Comments

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41 months ago
It's too bad that the American tax system incentivises not bringing the money back into the United States.
Rating: 23 Votes
41 months ago
They could spend some of that on building an apple store closer to me.
Rating: 17 Votes
41 months ago

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.
Rating: 12 Votes
41 months ago
Yup. Apple would have to pay about $12B in taxes if they brought that money into the U.S.
Rating: 7 Votes
41 months ago
What I would give for 0.01% of that
Rating: 7 Votes
41 months ago
Funny how the U.S. can tax revenue that never actually existed in the U.S. Gotta love "repatriation!"
Rating: 7 Votes
41 months ago

Apple pays taxes on the earnings made overseas in the country those earnings originated, ex., sales in Germany = taxes paid to Germany. But for Apple to bring that money made in (by example) Germany back to the U.S. they would have to pay U.S. taxes too, i.e., double taxation. What Apple and other companies have been lobbying for is to at least have a reduced taxe rate to bring that money back to the U.S.


SO they benefit from cheaper labor overseas, and want to bring the profits home for free? I can see why that's a problem. I wonder if manufacturing products in the US and paying higher initial taxes and labor would actually be less than the taxation they are facing now?
Rating: 6 Votes
41 months ago

Apple is part of the reason I can't find a job after graduating college in May. I studied performing arts with a 3.5 GPA!!

How many of you graduated with that high GPA?


Ummmm...performing arts?
Rating: 6 Votes
41 months ago

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.
Rating: 5 Votes
41 months ago

I don't think corporations should pay tax on money earned overseas. They should just pay for our Navy, Army, Marines, Air Force, and State Department overseas which makes international business less risky.

/Oh yeah, that's a big part of federal taxes...


Yeah, because all other countries in the world would be in uproar if it wasn't for the American army!
I got a news flash for you, most other countries can run themselves quite fine without the American army. Let's ask Iraq how well that worked out
Rating: 5 Votes

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