eBay cops $3 BILLION tax bill after moving its profits back onshore
IRS kicking leaves tat bazaar with $6bn for potential buyouts
Online tat bazaar eBay has copped a $3bn tax bill after bringing $9bn of cash held overseas back to the US. The firm hopes to use the remaining money to fund potential acquisitions at home.
The firm announced as part of its first quarter earnings that it had paid a discrete tax charge of around $3bn to bring the cash pile back to the US to provide “greater financial flexibility”.
"If you look at our last 15 acquisitions, my guess is ten have been inside the US, maybe 11," chief exec John Donahoe said in an interview. "Just looking at that versus where our cash is located, you just say, alright it would make more sense to have more cash in the US for M&A."
The move beefs up the company’s war chest, but it also pushed the firm into a loss in the quarter on the tax charge. The firm registered a net loss of $2.3bn for the three months, even though revenues rose by 14 per cent from the same time last year to $4.26bn.
eBay wouldn’t say how it intended to splash the cash in America, but it said it saw opportunities at home for the extra funds.
“The reality is we're seeing growing opportunities in the US," CFO Bob Swan said during a call with analysts. "Additionally, we are an acquisitive company and we need to ensure we have the resources available to capitalize on targets that become available both domestically and abroad."
Despite eBay’s plans for expansion and the end to activist investor Carl Icahn’s griping over the firm’s handling of subsidiary PayPal, investors didn’t seem too happy. While first quarter profit before the tax charge was better than expected, the forecast for next quarter was slightly below analyst estimates, pushing shares down six per cent in early morning trading to $51.30. ®
Sponsored: Network DDoS protection