Will Apple's $130bn cash infusion keep investors onboard? Apple may be cash-rich, but it's in a product-release quiet period – which may be why it's accelerating its efforts to return capital to its investors in the forms of steadily increasing dividends and a more aggressive stock-repurchase program, and will again "access the debt markets" to pull it off. You'd think that with $150 …
Definitely 100% peak apple right now. Sod all innovation since Cook took over and just look at the sad line up of the once glorious iPod on the Apple website. The Apple TV is a joke and Android is better than iOS. The latest MacBook Pros are next to useless with non upgradable RAM and no Ethernet. They can shove their stupid glossy screens that replaced the absolutely fantastic cinema displays and dumbed down professional software up their arse. Personally I didn't mourn the passing of Jobs but a few years down the line and just look at the sad sorry state of Apple now.
> So they've got loads of luvverley money, but they can't actually touch it because they don't want to pay tax on it. I find this somewhat amusing.
They'll be holding out for a special concession.
"We'll repatriate funds if the IRS will give us a deal. Otherwise the IRS get's nothing."
Eventually, some government official will decide that some cash now is better than no cash in his political lifetime. Government: its just business.
If they bring in off-shored money they will get taxed huge (some tens of percent).
Debt they can get as a percent or two. Clearly it is cheaper to use debt.
The sad thing is that pretty much everyone is doing buy-back to artificially boost their share price. Blue chips like Coke are even doing it. When the quantitative easing stops, and money gets tighter, the buybacks will stop and these stocks will slump.
In some ways, buy back is the opposite of stock splitting. That they are doing both simultaneously makes it look a bit like a smoke screen.
At today's current stock price $571.94 (pre split), each share holder is going to get an amazing .5% earnings. Note the decimal point. They may be paying out large sums in total, but the investors are taking it up the arse on this one. They only way an investor is going to make money on Apple in the near future is going to be to SELL before their market value goes in the crapper...
A .5% dividend is extremely strong. Please note that .5% contains no zeros, which isn't common; .0(x) or .00(x) dividends are common.
Incidentally, your logic is also backwards. While .5% might not seem like much to someone with a few hundred thousand invested in a company when you've got many millions invested a .5% dividend more than covers the costs of managing that investment and that's huge. It's like putting your money in an interest bearing bank account and the bank doesn't take their cut of the accrued interest (you know that's how that works right?).
Whatever source you're using for your investment information is a less than accurate source of information. It would behoove you to look around at some different brokers or pick up some different sources information if you're investing and managing your own money.
Steve Jobs brought more than polish to Apple products. In the 1980s, he put Macintosh in schools by practically giving them away. In the 2000's he somehow managed to line up media deals to become a marketplace instead of just a device. He was an innovator without boundaries. He cared about education.
With $88 billion offshore, Apple could eradicate $18 billion in Detroit pension debt, buy a lot of land at cut rate prices, and educate a generation of young people to become computer programmers.
Hey Apple: Think Different!
I would check back the article which made the claim about half their money being in the US. That definitely does not fit what I read on the subject.
About the deferred taxes, I suspect Apple does not count this as money they have not yet paid taxes on, but as money they don't intend to pay taxes on, ever.
DougS, Apple don't defer taxes by shifting almost all their profit offshore, they avoid taxes by parking the money in tax havens. And not just in the USA, they do it in every major market stupid enough to let them keep on getting away with it, which is pretty much all of them. They don't have to account for it in the country where they operate because, according to their accounting system, this vast pile of money "wasn't earned in the USA" (or Australia, or the UK, or whatever other country they are avoiding tax in today), it was actually 'earned" in Taxhavenstein, where it just so happens that they have a huge management, design, manufacturing, and distribution centre consisting of an answering service and a post office box. Oddly enough, the chap who drops in to check the mail three or four times a week, who is 100% of their Taxhavenstein payroll, is so productive that on his own he makes fives times as much profit as the 600,000 lazy Americans do all put together.
You can call it tax "avoidance" if you want, but it is deferral. They are limited in what they can do with that money until it is brought into the US and taxes are paid. Almost every company with significant offshore income is parking is employing the same strategies and parking it offshore just like Apple, hoping for another repatriation holiday like in 2004, or a lowering of the top corporate tax rate.
If you earned more than you spent every year, wouldn't you want to defer taxes on that money to the future? If you live in the US, you already do - it is known as a 401K!
Not "probably". They don't even try to pretend that it is anything other than what it is: a gigantic tax evasion trick. By borrowing money to give to shareholders, they can claim the interest on that money as a tax deductable expense and meet the repayments out of their massive pile of tax-evaded dollars in offshore bank accounts. Perfectly legal, and as honest as a once-in-a-lifetime email from a Nigerian dictator.
Pundits are perplexed by the products Apple proffers but the punters are placated, snaffling all that Apple offers.
Prognosticators pine for an Apple that was Jobby, meanwhile Cookie’s feeling fine, buoyed by his beellion dollar hobby.
So, while Samsung sadly sniffles at the greenbacks Apple riffles, fanbois fondly fondle iSlabs and pooh-pooh peak Apple piffle.
Of all the things about business the general public misunderstands the repatriation of monies. Unfortunately, that's one of the things that harms taxpayers the most.
When you hear CEOs and Republicans go on about how taxes on repatriated money (which is a stupid term anyway) are limiting investment and the resultant trickle down, they are lying. Full stop. Hard to believe, I know, but that's the way it is. Here's a summarized explanation why.
There are two main points:
a) Investment in R&D - Funds repatriated for R&D purposes are not taxed. See, we've played this game before. Companies saying they couldn't do R&D because the taxes on repatriated funds were too high. If the proles want affordable 'stuff' and the politicians want improved economies and post-public service consultant contracts then eliminate taxes on funds for R&D (which, incidentally, includes mineral exploration and land leasing). So, done. No taxes on repatriated funds for R&D.
Surprisingly, the levels of R&D didn't increase. Share prices of R&D heavy companies went up, as did the number of things that were considered R&D, but not actual R&D efforts. Know why? It's because investors don't want R&D investment because it's actually an investment. It gets complicated at that point, so let's just say shenanigans ensued and the end result is that if companies booked anymore R&D expenses than they currently do while still not producing anything new it would look suspicious. So that avenue is closed.
b) No company invests their own money in anything. None, nobody does that. That's basic business 101: Never use your own money if you can use someone else's.
Doing it that way eliminates huge liabilities, doesn't impact your books beyond the debt service cost and leaves your capital in place to be making you even more money by hanging out as part of someone else's investments. It's kind of like if you borrowed $10 from a friend but only had to pay him back a few pennies a year so you got $9.93 for 'free'. Not really free obviously, but free as far as your books go. It increases your debt, sure, but that's less than meaningless if you've got good revenue flow. That's not a new practice. It's the way business has always been done (3,000 years anyway).
It's not like you had to borrow that $10, you've got $100 in the bank. But if you used your own money then you'd only have $90 left instead of $109.93. Plus you would be reducing the amount of work your money can do for you. The seven cents it costs you to borrow the $10 is about half of what it would cost if your accruing surplus would make if it were at $90.
The accounting gets complex, but again, we've been through this. Tax Amnesty for repatriated funds and massive 'fuck you prole' trade agreements like NAFTA were implemented and not a god damn thing changed. Know why? It's because the way money works doesn't change. Even if companies had a tax rate of zero (0%) it would still be stupid to invest their own money. The surplus would still generate more money, faster, by just hanging about than it would cost you to borrow the money for investment. Not borrowing the money doesn't make sense no matter what the tax burden is.
It's fiducially irresponsible to spend your own money on anything much other than stock buybacks and legal Macumba. Therefore, I could give zero fucks about what corporate tax rates are. They have no impact on investment or job creation. Keep the corporate rates high and let Cook & Co. pay their own fare like everybody else. They've done well enough to reach the point where economics get turned upside down and that gives them access to financial strategies most individuals and small businesses can utilize. Good for them I say. I also say fuck them. Shut up and pay and stop bullshitting me. I've been here before Mr. Cook.
More importantly, the voodoo merchants have taken over. Once the CFO is spending more time in meetings having commercial paper explained to him, and how the problems of the banks and hedge funds in 2007-8 don't apply to Apple, the company is basically turning into a hedge fund which just happens to be heavily invested in a sales and marketing company that turns Chinese goods into dollars.
Perhaps strangely, I once got a very good piece of advice from a senior accountant that worked with real companies: If the business is sound and making money, just pay your taxes. The effort you save can be invested in running the business. Once you start to worry about holding on to every penny of profit, you're just a miser, and misers are not usually good businessmen.
As a later El REG posting points out; data held 'abroad' in the cloud i.e outside the US, is being effectively subpoeaned breaching any foreign data protection laws. The US has no problem with applying a strong exra-territorial view of it's laws. Why don't they just do the same for all funds held overseas or in geographic limbo..By the likes of Apple, MS, Starbucks etc etc
Maybe a concerned citizen could lodge a suit in Delaware, home of the corp litigation industry for immediate payment of tax due on offshore cash mountains.
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