Well, first of all it certainly was not 3-4 years. It was less than one year. iPhone 1 was released in the US on June 29, 2007 and in 6 more counties in November 2007. The Iphone 3G was released simultaneously in 22 countries in July 2008 and was in 80 countries not long after that.
Also, at the time, the iPhone wasn't the only product that Apple sold. Remember the Macintosh? Remember the iPod?
Actually they cannot be entirely arbitrary in most jurisdictions. I know for a fact that Australia has sent large tax bills to local subsidiaries of many multinational companies that played with transfer costs. There are quite strict rules about allowable bounds for transfer costs as a proportion of COGS. If the US tax department does not have these rules, then the best practice deficiency is with the US tax office, not with Apple.
The issue in Apple's case is whether foreign profits are kept as retained earnings of paid back to the parent as a dividend. Note that this may be a taxable event in the foreign subsidiary as well, whereas reinvestment locally may not. In the US this is certainly the case, as it takes 10% withholding tax from all dividends paid to foreign shareholders. Note that the decision on whether cash is paid out is the decision of the directors of the foreign subsidiary, which is not necessarily wholly-owned.
I might also add that I do agree that it is strange for Apple to be suddenly returning all this cash to shareholders in response to some shareholder activism. It certainly puts a much lower cap on my expectation of where its share price will get to in the next couple of years.
The Starbucks issue is one of dodgy transfer pricing which moved profits actually earned in the UK to other, low tax jurisdictions. Unless I am mistaken, this is not the issue with Apple or its peers who have large cash hoards overseas. (well, they may also be playing with transfer pricing, but it is not the US government that they are bilking). There are ways and means of dealing with this and I know that Australia, for example, scrutinizes transfer pricing very closely so that Apple, for example, does not sell iPhones from its HKG entity to its Australian entity for $500 and then on-sell them to the Australian consumer for $550, making only $50 profit. The tax office has the power to deem a transfer price and charge tax accordingly if it sees behaviour like that.
The issue we are dealing with here is one of stranded resources. Apple is a global company and not just a US company. It earns money in many places and is required to pay tax where the money is earned. If it wants to take a dividend from its foreign entities (which is a more accurate description than "repatriation") then of course it has to pay tax on that dividend at head office, and it gets a credit for tax already paid on that dividend to foreign governments as well. But what if, instead of taking a dividend, it wants to invest that cash somewhere else outside of the US? Obviously it makes far more sense to send the money direct than to pass it through the the US or any other place that will take a cut on the way through. The real problem is the unusually high corporate tax rate in the US. If it were more comparable with the rates elsewhere, a lot more dividends would be taken and invested back in the US.
Actually this is one of the arguments to do away with corporate taxes altogether and just charge individuals full marginal income tax on dividends when they are received. But that would be to admit that corporations are not people. :-)
I think the rest of the world already operates on the "territorial" system. I doubt the "non-deferral" option is practical. It would be like you being liable for tax on the retained earnings of a company you own shares in. Remember that Apple Australia inc. is a 100% true blue Australian company and has no connection to the US other than the fact that its only shareholder is domiciled in the US. If different rules were made for companies that were wholly-owned subsidiaries, you'd find very quickly that the shareholder would suddenly be domiciled somewhere else.
Quite frankly I can't get excited about corporations not sending money held in non-US subsidiaries to the US if that makes no financial sense. That cash was earned outside of the US, selling products that were not made in the US to customers not located in the US, and tax was paid on that income where it was earned. Apple had the choice of sending the money to the US ("repatriation" is the wrong word because the cash was never in the US to begin with.) and paying the difference in corporate tax rates - nothing very different from anywhere else here, except that US corporate tax rates are higher than just about anywhere else and very significantly higher than many places.) or borrowing in the US at ridiculously low rates. They made the logical choice and to do otherwise would be to fail in their fiduciary duty to their shareholders, many of whom are not domiciled in the US either.
While there remains any chance that the cash will be used to defray overseas expenses or to invest outside of the US, it would be almost criminal to go handing a large portion of it over to a government that had no contribution in its making for no good purpose.
Jobs Report Jolts The Australian Dollar [View article]
There has been an explanation of the numbers come out from the ABS. From the Age: "The Bureau of Statistics had confirmed earlier in the day that the figures it published for February showing the unusual jump in employment of 71,500 overstated the increase, most likely by a factor of two.
To understand why, it is necessary to examine the way the figures are created.
Each month the bureau surveys about 29,000 homes. One-eighth of the group, about 3600 homes, leave the survey each month and a new 3600 are ''rotated'' in.
Rarely, usually only once every one or two years, employment conditions in the new homes are quite different to those in the old. When that happens, the official employment numbers jump (or fall) even if employment itself hasn't changed.
The houses rotated in in February were extremely different to the houses rotated out. So different that the bureau believes the rotation itself was responsible for half of the reported 71,500 surge in employment, the ''best monthly job creation result in 13 years''.
Bureau staff explained this to government officials in a briefing on Wednesday morning.
Another unusual occurrence ''amplified'' the error.
To convert its survey into answers for the entire population, the bureau multiplies the result by a number based on its guess of the population. Its best guess is that Australia's working age population rose by more than usual at the start of this year as a greater than usual number of foreign students arrived.
It reckons this further exaggerated the already-exaggerated employment growth, perhaps by another 13 per cent.
It would prefer people to look at its estimate of what it calls the trend. This shows employment climbed at a sedate pace of 11,600 in February, much less than 71,500, and just enough to keep pace with population. The unemployment rate remained steady at 5.4 per cent.
The NSW rate rose from 5.1 to 5.2 per cent. The Victorian rate fell from 6.1 to 5.5 per cent. Victoria accounted for more than half of the reported 71,500 surge in employment."
The RBA has also come out saying that the employment number, by itself does not much affect the interest rate outlook. Might be best to ignore this rally on the AUD.
Yum's Greater China chief has just pulled off the sandbagging coup of the decade. Last year prices at KFC went up by about 25%, promotions all but ceased, and to top it off we had the hormone scandal. No wonder sales were down.
So quota no doubt get dropped quite significantly. Now the scandal has abated and sales are down by only 80% of forecast. Normally when I go into KFC, a large percentage of customer are using promotion coupons. Today when I went in, there was not a coupon to be seen. I think it is pretty safe that, after a respectable wait, promotions will resume, we will see sales bounce back, and shareholders' dollars will disappear into Chinese pockets in the form of unearned bonuses and commissions.
Wall Street Breakfast: Must-Know News [View article]
My theory is that the head of YUM China is in the process of pulling off the biggest sandbagging coup of the century. He got his quota down by 25% and is already exceeding target by 8%. Next: promotions, which stopped at the end of last year, will be reinstated.
Why Batteries Are Too Valuable To Waste On Solar Power Integration And Electric Cars [View article]
Not necessarily. There is more than one battery per car, but it may be be that using quick exchange the charging part of the cycle can be done in a way that you get more charge/discharge cycles out of each battery, and in the end the figure of merit will be (primary energy saved per cycle)*(number of cycles per battery)/(primary energy needed to manufacture the battery.)
I enjoyed the article. It is good to more rigour being introduced.
I have one minor quibble. 1 MJ =/= 277.8 WH of electricity. Electicity is work. 1MJ of primary energy is heat. In order to get 277.8WH of work, you need anywhere from 1.6MJ to 5MJ of heat depending on whether the electricity is produced by the most efficient combined cycle power plant or an internal combustion engine. This makes all the calculations very tricky, and I am not sure it is taken into account in the analysis?
Also, here in China where Iive, approaching 100% of batteries get recycled. What is the difference in energy input between a battery made starting from black dirt and batteries made from recycled batteries? I would assume that in the real world the vast majority of batteries would end up being made from recovered materials.
Well, in general when new highs are made, the market is pretty friendly for a few weeks at least. But then the S&P has not made a new high yet. Given that the politicians will be away from the microphone from for 3 months or so now, I am expecting an upward trending market for a while. The exception would be if YoY growth of the nonfarm payroll drops back below 1%, then I am out and then short the indices.
So I think that if SPY closes above 155.50 today then we are good for at least the rest of the week.
What a difference a day makes. On Friday the last two candles on the SPX were a doji and a hanged man on easing volume, meaning an impending trend reversal, but if today continues relatively quietly, we'll have an upward engulfing candle with a rising ADX which means we are in for another leg up.......
Can Hybrids Extend Life Of Seagate And Western Digital? [View article]
Sure I did. When I looked about a year ago ther were several solid-state storage technologies in the pipeline, at least one of which stands a very good case of displacing spinning rust by the end of the decade by the looks.
Shame On You, Apple [View article]
Also, at the time, the iPhone wasn't the only product that Apple sold. Remember the Macintosh? Remember the iPod?
Shame On You, Apple [View article]
The issue in Apple's case is whether foreign profits are kept as retained earnings of paid back to the parent as a dividend. Note that this may be a taxable event in the foreign subsidiary as well, whereas reinvestment locally may not. In the US this is certainly the case, as it takes 10% withholding tax from all dividends paid to foreign shareholders. Note that the decision on whether cash is paid out is the decision of the directors of the foreign subsidiary, which is not necessarily wholly-owned.
Shame On You, Apple [View article]
Shame On You, Apple [View article]
The issue we are dealing with here is one of stranded resources. Apple is a global company and not just a US company. It earns money in many places and is required to pay tax where the money is earned. If it wants to take a dividend from its foreign entities (which is a more accurate description than "repatriation") then of course it has to pay tax on that dividend at head office, and it gets a credit for tax already paid on that dividend to foreign governments as well. But what if, instead of taking a dividend, it wants to invest that cash somewhere else outside of the US? Obviously it makes far more sense to send the money direct than to pass it through the the US or any other place that will take a cut on the way through. The real problem is the unusually high corporate tax rate in the US. If it were more comparable with the rates elsewhere, a lot more dividends would be taken and invested back in the US.
Actually this is one of the arguments to do away with corporate taxes altogether and just charge individuals full marginal income tax on dividends when they are received. But that would be to admit that corporations are not people. :-)
I think the rest of the world already operates on the "territorial" system. I doubt the "non-deferral" option is practical. It would be like you being liable for tax on the retained earnings of a company you own shares in. Remember that Apple Australia inc. is a 100% true blue Australian company and has no connection to the US other than the fact that its only shareholder is domiciled in the US. If different rules were made for companies that were wholly-owned subsidiaries, you'd find very quickly that the shareholder would suddenly be domiciled somewhere else.
Shame On You, Apple [View article]
While there remains any chance that the cash will be used to defray overseas expenses or to invest outside of the US, it would be almost criminal to go handing a large portion of it over to a government that had no contribution in its making for no good purpose.
Texas Hold 'Em Tournaments And Value Investing [View article]
Jobs Report Jolts The Australian Dollar [View article]
Jobs Report Jolts The Australian Dollar [View article]
"The Bureau of Statistics had confirmed earlier in the day that the figures it published for February showing the unusual jump in employment of 71,500 overstated the increase, most likely by a factor of two.
To understand why, it is necessary to examine the way the figures are created.
Each month the bureau surveys about 29,000 homes. One-eighth of the group, about 3600 homes, leave the survey each month and a new 3600 are ''rotated'' in.
Rarely, usually only once every one or two years, employment conditions in the new homes are quite different to those in the old. When that happens, the official employment numbers jump (or fall) even if employment itself hasn't changed.
The houses rotated in in February were extremely different to the houses rotated out. So different that the bureau believes the rotation itself was responsible for half of the reported 71,500 surge in employment, the ''best monthly job creation result in 13 years''.
Bureau staff explained this to government officials in a briefing on Wednesday morning.
Another unusual occurrence ''amplified'' the error.
To convert its survey into answers for the entire population, the bureau multiplies the result by a number based on its guess of the population. Its best guess is that Australia's working age population rose by more than usual at the start of this year as a greater than usual number of foreign students arrived.
It reckons this further exaggerated the already-exaggerated employment growth, perhaps by another 13 per cent.
It would prefer people to look at its estimate of what it calls the trend. This shows employment climbed at a sedate pace of 11,600 in February, much less than 71,500, and just enough to keep pace with population. The unemployment rate remained steady at 5.4 per cent.
The NSW rate rose from 5.1 to 5.2 per cent. The Victorian rate fell from 6.1 to 5.5 per cent. Victoria accounted for more than half of the reported 71,500 surge in employment."
The RBA has also come out saying that the employment number, by itself does not much affect the interest rate outlook. Might be best to ignore this rally on the AUD.
Yum's China Recovery Begins [View article]
So quota no doubt get dropped quite significantly. Now the scandal has abated and sales are down by only 80% of forecast. Normally when I go into KFC, a large percentage of customer are using promotion coupons. Today when I went in, there was not a coupon to be seen. I think it is pretty safe that, after a respectable wait, promotions will resume, we will see sales bounce back, and shareholders' dollars will disappear into Chinese pockets in the form of unearned bonuses and commissions.
Wall Street Breakfast: Must-Know News [View article]
Why Batteries Are Too Valuable To Waste On Solar Power Integration And Electric Cars [View article]
I enjoyed the article. It is good to more rigour being introduced.
I have one minor quibble. 1 MJ =/= 277.8 WH of electricity. Electicity is work. 1MJ of primary energy is heat. In order to get 277.8WH of work, you need anywhere from 1.6MJ to 5MJ of heat depending on whether the electricity is produced by the most efficient combined cycle power plant or an internal combustion engine. This makes all the calculations very tricky, and I am not sure it is taken into account in the analysis?
Also, here in China where Iive, approaching 100% of batteries get recycled. What is the difference in energy input between a battery made starting from black dirt and batteries made from recycled batteries? I would assume that in the real world the vast majority of batteries would end up being made from recovered materials.
Personal Stress Tests [View article]
So I think that if SPY closes above 155.50 today then we are good for at least the rest of the week.
Personal Stress Tests [View article]
*slap*
oops. forgot to take my meds. As you were.
Can Hybrids Extend Life Of Seagate And Western Digital? [View article]
Can Hybrids Extend Life Of Seagate And Western Digital? [View article]