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Takeaway: We hosted a call on 12/20/2017 detailing the implications of the tax reform bill on the technology sector (replay and slides links below).

CLICK HERE to access the audio replay.

CLICK HERE to access associated slides.

REPLAY | Tech & Taxes | Did They Bury the Lede? | MSFT, FB, INTC - 10K ft

Topics discussed on the call:

  • Comparison of major provisions
  • Potential major change in the expensing of R&D costs
  • Top down view with relation to all tech companies
  • Categorical winners and losers
  • Impacts to Hedgeye Tech Sector LONG/SHORT tickers

REPLAY | Tech & Taxes | Did They Bury the Lede? | MSFT, FB, INTC - bury the lede

Tiers of companies seeing positive/negative impacts:

There are at least 4 tiers of companies for whom this nets positive impact:

Tier 1 = Companies who are fast innovators, generally tight on cash, and any extra access to cash helps keep the flywheel in play

Tier 2 = Companies that are mature, have tons of excess cash, don't really know what to do with it, have a buyback – this will drop into the buyback bucket

Tier 3 = Companies who do not have (enough) growth and need help in that category, cue M&A!

Tier 4 = Companies who are debt heavy and need cash, this is an important lifeline. 

REPLAY | Tech & Taxes | Did They Bury the Lede? | MSFT, FB, INTC - Acqs slide

There are at least 3 tiers of negative impact:

 

Tier 1 = Companies who looked like a great acquisition target because they are foreign domiciled and hence an efficient use of cash for a US company with lots of stranded cash (Ahem…NXP)

Tier 2 = Companies who compete head to head with US companies who had been constrained by higher tax rates and (maybe) lower re-investment opportunities

Tier 3 = Companies who have good business but have been using debt to shield taxes à Les Jeux Sont Fait (translation = “the game is up”)

REPLAY | Tech & Taxes | Did They Bury the Lede? | MSFT, FB, INTC - repatriation