Microsoft (MSFT) Leverages International Cash in Skype Deal
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One important overlooked fact from Microsoft's (Nasdaq: MSFT) $8.5 billion acquisition of Skype was the use of the company's enormous overseas cash hoard.
In the deal, Microsoft will smartly use a portion of its internationally cash since Skype is incorporated in Luxembourg. The company's international cash balances represents nearly 80% of its total funds, according to analysts at Collins Stewart. This cash wouldn't have been able to be used in the U.S. without a significant tax hit.
There has been much debate over the past few months about the large international cash balances of U.S. companies, some calling for the repatriation of this cash without the large tax hit.
Microsoft's Skype deal could force other U.S. companies with large international cash balances to look outside the U.S. for deals. Cisco (Nasdaq: CSCO) is a company in a similar position and it too could be on the prowl for international deals to utilize their international cash.
In the deal, Microsoft will smartly use a portion of its internationally cash since Skype is incorporated in Luxembourg. The company's international cash balances represents nearly 80% of its total funds, according to analysts at Collins Stewart. This cash wouldn't have been able to be used in the U.S. without a significant tax hit.
There has been much debate over the past few months about the large international cash balances of U.S. companies, some calling for the repatriation of this cash without the large tax hit.
Microsoft's Skype deal could force other U.S. companies with large international cash balances to look outside the U.S. for deals. Cisco (Nasdaq: CSCO) is a company in a similar position and it too could be on the prowl for international deals to utilize their international cash.
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