Apple, tech companies to bring back $400 billion in overseas cash to the US: Estimate

Key Points
  • GBH Insights says technology companies will benefit from the repatriation of overseas cash holdings in 2018.
  • The firm's analyst predicts the companies will bring in $300 billion to $400 billion into the U.S. this year, with Apple representing $200 billion of that amount.
Apple CEO Tim Cook
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Technology companies will thrive from the hundreds of billions in cash parked outside the U.S. coming into the country this year, according to one Wall Street firm.

"With the Trump administration and Beltway imposing a 15.5% tax on [repatriated] cash earnings vs. the previous 35% tax rate we expect a surge of overseas cash to come back into the US with large cap tech being the clear beneficiary for 2018 and beyond," Daniel Ives, head of technology research at GBH Insights, wrote in a note to clients Thursday.

Ives estimates large U.S. technology companies have $550 billion to $600 billion parked overseas. He predicts they will repatriate $300 billion to $400 billion in 2018, with Apple representing $200 billion of that amount.

Repatriation of cash to US will boost some M&A activity

He noted more than 90 percent of the cash repatriated during a 2004 tax holiday was used for stock buybacks and dividends. However, Ives believes companies will use 70 percent this time for capital returns and use the remaining 30 percent for acquisitions, investment spending, research and development.

"We believe accelerated buybacks, another dividend hike, and potentially larger M&A will be the trifecta of benefits shareholders could expect to see in 2018" for Apple, he wrote. "We strongly believe it is a ripe time for Cupertino to look ahead and make a bigger bet on a new growth area such as streaming video."

For all U.S. companies, Macquarie Research estimated roughly $860 billion will be repatriated this year.

"Repatriation is less likely to provide a boost to business investment in our view, but could lead to a stronger US dollar in 1H18," analyst David Doyle wrote in a note to clients Friday.

Morgan Stanley also said in November that Microsoft, Apple, General Electric, Pfizer and IBM are the companies with the most "accumulated foreign earnings."


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