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Why Doesn't Apple Repatriate Its Cash?

|Includes:Apple Inc. (AAPL)

The obvious answer is taxes.

The less obvious answer is even if the tax rate were low it may not make sense to repatriate everything. If Apple is going into the payments business and potentially the credit card business having local currency is better. Money transfers between buyer and seller would not incur foreign exchange costs and delivery of funds would be quicker.

In the case where one sends money internationally again Apple does not have to incur foreign exchange fees. For example an American buys something from China. Apple credits its domestic cash pile and debits the Chinese yuan pile.

How the underlying network will process the payments remains to be seen. Apple has the necessary technical, financial, and brand firepower.

Disclosure: I am long AAPL.

Stocks: AAPL