Apple is doing everything it can to avoid the hefty tax associated with bringing its gobs of foreign cash home to America. Ebay appears to be doing just the opposite.
In the company’s first quarter earnings report, Ebay beat the consensus Wall Street estimates, but shares fell 3% in after hours trading as investors scratched their heads. Ebay announced that it would repatriate $6 billion in foreign earnings to increase available U.S. cash and enhance “financial flexibility.”
The cash move will incur an approximately $3 billion tax charge — the likes of which most international companies have tried to avoid. Corporate executives have long lobbied Washington for a “tax holiday” to repatriate cash with no penalty. Most recently, Apple said that it would borrow $12 billion rather than incur the tax to bring home its foreign money. It isn’t immediately clear why Ebay took a different route.
“We are committed to delivering sustainable shareholder value and focusing on what matters most to our investors. We are executing our growth plans, capitalizing on the synergies in our portfolio and aggressively executing our $5.0 billion share buyback program,” CEO John Donahoe said in a statement.
In Ebay’s first earnings statement after it struck a peace deal with Carl Icahn, the company posted $0.70 earnings per share vs. $0.67 estimated and $4.26 billion revenues vs. $4.23 billion estimated.
PayPal was once again Ebay’s strongest segment, growing net total payment volume by 27% and net revenue by 19% year over year. Revenues on the marketplace side were up 10%.