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Strategies & Market Trends : World Outlook

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From: Don Green1/3/2018 2:51:19 PM
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The ripples of the GOP tax bill, now law, are continuing to reverberate in the investment community. Last week we looked at Apple's almost $40bn tax bill on its $200bn+ overseas cash before any deductions - a sizeable bill indeed. Here's a look at the Cheddar TV segment discussing this phenomenon.

Microsoft ( MSFT) is another tech giant to be hit by the bill's deemed repatriation provision. Under the bill, "all foreign profits are 'deemed' to have been brought back [to the US] already and are immediately taxed."

As we can see from the chart above, 95% of Microsoft's $138bn in cash are held overseas, or roughly $132bn. In fact, it ranks #2 behind Apple ( AAPL) in total cash overseas by US companies.

Now that the details of the GOP tax plan are becoming more widely known, Microsoft will soon face investors and analysts on their upcoming earnings call, and this cash will certainly be a topic of conversation.

Out the outset, investors will rightly inquire about what to do with the remaining cash, now that the company cannot "stash" it away under the deemed repatriation provisions. A recent Merrill Lynch survey of S&P companies may shed some light on the subject:

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