Feeds

Bring me your dollars, yearning to be free

And get bought by Oracle?

  • alert
  • submit to reddit

New hybrid storage solutions

The earnings season has an added twist of drama this quarter. US multinationals are paying more tax than usual, adversely affecting their bottom lines, as they repatriate billions of dollars to the US.

Computer Associates, Lexmark International and Citrix International are just three tech-sector players who - like their cousins elsewhere in the US economy - are paying tax on money that they had housed abroad and are only now bringing back on shore.

Next month, IBM will join the club. Next quarter's results will see a $450m tax hit as it repatriates $9bn to the US.

IBM, CA, Lexmark and Citrix et al are taking advantage of tax breaks under the American Jobs Creation Act, passed by Congress in 2004. This grants US companies that hold money offshore a temporary tax break to bring back their money and invest it in the domestic marketplace. Congress was reacting to the outcry and concern generated by outsourcing.

Progress has been poor, though, as companies have either been slow to put practices in place to return the cash or have been holding out for favorable exchange rates. Collectively, US companies have announced plans to bring back up to $250bn. Since the amnesty started, maybe a fifth of that figure has gone stateside, according to estimates.

But time is running out as the tide of cash flowing back into the US is likely to increase. That means a short-term tax hit, albeit at a much-reduced rate, for vendors.

Depending on how deep the government's tax break goes, the vendors in the enterprise software market are likely to feel the pain most, as costs and operations become squeezed. This market has been hit by profits warnings, failure to meet the expectations of Wall Street analysts, slowness to close deals, and declining business from sales of product licenses during the last two quarters .

All this makes the market a lot more comfortable for platform providers such as Oracle to operate. Oracle wants to expand its customer base, technical expertise and vertical expertise through acquisition, by picking off smaller companies or those having problems executing.

More M&A anyone? ®

Related stories

Siebel posts $50m Q2 loss
Sun posts flat Q4
Oh, the 'maturing' middleware market

Providing a secure and efficient Helpdesk

More from The Register

next story
Quit drooling, fanbois - haven't you SEEN what the iPhone 6 costs?
How keen will buyers be when exposed to the real price?
Ex-Autonomy execs: HP's latest wad blows apart fraud allegations
Top bods claim IT titan's latest court filing is smoking gun of 'reckless aggression'
Forget silly privacy worries - help biometrics firms make MILLIONS
Beancounter reckons dabs-scanning tech is the next big moneypit
Elon Musk says Tesla's stock price is too high ... welp, NOT ANY MORE
As Nevada throws the SpaceX supremo a $1.25bn bone
Microsoft's Office Delve wants work to be more like being on Facebook
Office Graph, social features for Office 365 going public
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.