- Analysts say Apple’s plans to repatriate hundreds of billions of dollars of overseas cash could have big implications.
- The move could compel other US companies to bring back their overseas cash.
- The plans to build a new campus in the US with some of the cash will be good for Apple’s reputation, and there are some interesting acquisition opportunities that Apple could pursue.
Apple announced on Thursday that it plans to reel a huge chunk of its overseas cash back home and to build a new US corporate campus.
The news has ignited speculation about everything from Apple’s acquisition plans to a potential U.S. manufacturing rebirth, and it helped Apple share’s finish Wednesday’s regular trading session up 1.65%.
Apple has only provided limited details about its cash repatriation, so there’s a lot we still don’t know.
To get a better idea of what might be on the table, Business Insider spoke to several investors and analysts about their views on the big news. Here’s what they said:
Apple will entice other companies to follow its lead and bring a flood of cash back to the US
“It’s a big deal because if you look at the entire overall tech sector in regards to the sheer volume of cash that they’re [Apple] holding, it’s definitely the highest.
You have a headline, poster boy tech company making those steps, so you would expect others to follow.
It’s a win-win for everybody.
It’s another growth engine to add to the cycle we’re in. We’re in a pretty extended economic cycle, it’s now 9 years old and lot of people are scratching their heads wondering when it’s going to end. So you’re really putting some extra legs on this.”Dan Morgan, Senior Portfolio Manager, Synovus Trust Company.
It’s a smart and shrewd political move by Apple
“Apple is doing the right thing getting ahead of a potential cash repatriation move showing they pay a lot of taxes and trying hard to generate US jobs. As a potential trillion dollar company, it risks backlashes of anything that looks tax advantageous.
Apple was one of the few companies that was doing job creation in the middle of America so I don’t think it was just a PR stunt. The company does want to help.
Apple won’t repatriate all their overseas cash but a lot of it. I believe we could see a Netflix or Tesla acquisition this year, but Apple will take some of that cash and invest in education and manufacturing.” Patrick Moorhead, Founder and Principal Analyst, Moor Insights and Strategy.
Everyone is waiting for an invite to the M&A party
Apple might want to acquire Tesla, but “Musk won’t sell,” says Loup Ventures Managing Partner Gene Munster.
“We’ don’t think they’re going to do any big M&A deals,” Munster says of Apple. But he defines “big” as more than $US5 billion.
And there’s one acquisition that Munster thinks is perfect for Apple: augmented reality glasses maker Magic Leap, which was last valued by private investors at just above $US5 billion.
For an in-depth look at Apple’s cash repatriation, read Troy Wolverton’s piece on BI Prime.
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