The iPhone maker announced plans on Wednesday to pay a tax bill of about $38 billion on an unspecified portion of its $252.2 billion in overseas cash holdings. Apple will also spend $30 billion on existing company sites and a new green-powered campus. It's hiring 20,000 and will contribute $350 billion to the economy over the next five years.
Apple's decision could be the first in a string of moves to bring foreign-held cash back into the U.S. under a new, more favorable tax plan that makes repatriation of funds cheaper.
According to Jefferies analysts, repatriation "may benefit all" members of the booming software sector. Having more cash will drive M&A activity and capital returns, plus executive pay, analysts said in a note on Jan. 18.
Jefferies estimated that the companies in its coverage with the most foreign-held funds available for repatriation in the U.S. after fees are Microsoft Corp. (MSFT) - Get Report with $110 billion, Oracle Corp. (ORCL) - Get Report with $49 billion, VMware Inc. (VMW) - Get Report with $7 billion, Citrix Systems Inc. (CTXS) - Get Report with $2 billion, CA Inc. (CA) - Get Report with $1.5 billion, Red Hat Inc. (RHT) - Get Report with $1 billion and Symantec Corp. (SYMC) - Get Report with $1 billion.
Repatriation appears to be the biggest driver of software industry bullishness given its wide swath of impact.
Additionally, the lower corporate tax rate "will benefit some," Jefferies said, with Paycom Software Inc. (PAYC) - Get Report gaining the most from a lower federal rate. The company's free cash flow, all else held equal, could increase 14%, followed by Alarm.com Holdings Inc.'s (ALRM) - Get Report cash up 11%, CA Inc. up 11%, Red Hat up 5%, Oracle up 4%, SS&C Technologies Holdings Inc. (SSNC) - Get Report up 3% and VMware up 3%.
"We believe secular forces are as positive as we've seen in nearly two decades of covering software due to advances in foundational computing tech that have turned the economic equation on its head, while cyclical forces are also on the upswing, reflected in rate hikes that could have an opposite effect," analysts wrote.
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