Thursday, January 18, 2018

Apple is still rotten to the core

 Apple will open a new campus as part of a five-year, $30 billion (21.70 billion pounds) U.S. investment plan and it will make about $38 billion in one-time tax payments on the overseas cash it intends to repatriate. Between the spending plan, hiring 20,000 people, tax payments and business with U.S.-based suppliers, Apple  estimated it would spend $350 billion in the United States over the next five years

 Trump described the move by Apple as a victory. “I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States. Great to see Apple follow through as a result of TAX CUTS,” he tweeted. 

However, not all is what it seems. 

It did not, however, say how much of the plan was new or how much of its $252.3 billion in cash abroad - the largest of any U.S. corporation - it would bring home. In addition to the $38 billion in taxes it must pay, Apple has run up $97 billion in U.S.-issued debt to pay for previous share buybacks and dividends. Some investors said the U.S. investments would give the company room to make more stock buybacks or pay dividends without criticism.

James Cordwell of Atlantic Equities said Apple’s U.S. investment plan could make it easier for the company to give more cash to shareholders. “Being seen to just hand the cash back to shareholders could spark some political sensitivities,” and the spending announcement could be part of Apple’s efforts to manage this issue, Cordwell said.

Walter Piecyk, managing director for TMT Research at BTIG Research, said he could not yet tell whether the U.S. expansion was an increase from a previous plan or meant investment abroad was being refocused in the United States. Reuters Breakingviews estimated that Apple could have increased U.S. headcount by 24,000 in the last five years.

Asked in an interview with ABC News whether the job creation announcements were directly related to the Republican tax plan, Apple Chief Executive Officer Tim Cook gave a measured response. “Let me be clear... there’s large parts of this we would have done in any situation,” Cook said.

Apple has announced no plans to change their practice of out-sourcing the manufacture of their products and experts confirm it would be economically impractical to make iPhones in the United States.

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