CUPERTINO, Calif. (TheStreet) -- Apple (AAPL - Get Report) is now one of a shrinking number of tech heavyweights avoiding dividend payments despite recent calls from shareholders and analysts to rethink its strategy.Even networking giant Cisco ( CSCO - Get Report) recently succumbed to pressure from shareholders and is planning to make a dividend payment next year. Microsoft ( MSFT - Get Report), which reversed its dividend stance in 2003, announced a 23% dividend hike on Wednesday. So why is Apple allergic to dividends?
It's also worth noting thatApple's R&D costs have certainly risen dramatically in recent years, and this trend is expected to continue, further pressuring rivals such as Research In Motion ( RIMM), Motorola ( MOT) and Nokia ( NOK). Lastly, a sizable chunk of Apple's money is overseas, making a dividend even less attractive. According to Apple's most recent 10-K filing with the SEC, just over 50% of the firm's cash, cash equivalents and marketable securities are held by foreign subsidiaries. As Apple notes in its filing, "amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S." So, how much would this cost Apple? It has been estimated that Apple could owe more than $5 billion in U.S. taxes if it were to repatriate its overseas cash for a dividend. Sure, Apple could easily make a dividend payment, but the tax implications would likely impact earnings greatly. Despite the recent calls for an Apple dividend, it should also be noted that the company is not the only tech giant shunning dividends. Google ( GOOG) has never paid a dividend. And Hewlett-Packard ( HPQ) has kept its dividend at 8 cents since 1998.
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