If they have to bring their money back, then you would be right. The fact that an estimated $1.2 trillion of US corporate cash (of an estimated total of $2 trillion) being held outside the US by companies tells me that they think $800B is plenty for whatever it is they want to do at home.
Indeed, most of the growth opportunities - and hence, investment needs - are abroad, rather than in mature economies such as the US.
And most of Apple's investments in plant and equipment for companies making their stuff, is abroad. Of course, those are really just upfront loans that result in big discounts and guaranteed supply, but still, it's cash being used.
They do invest here too though. Supposedly half the cost of building that giant Samsung plant in Texas to build Apple's SoC's was paid for by Apple.
That doesn't really apply. That discusses a share buy back where shares are taken out of circulation. Apple is not going to take shares out of circulation- they are going to reissue them, so it doesn't generate any of the benefits of a share buy back. It is no different than if Apple paid their employees with cash and the employees bought shares on the open market.
Quote:
Originally Posted by melgross
Yeah. But a lot of that is Voodoo. The point is that generalizations about this, as with most other things, doesn't help in an individual situation. It isn't even correct in a number of ways.
Generally, share repurchasing is done to lift shares that are tottering, by supposedly showing that management has confidence that share prices will go higher in the future. Of course, in reality, is says no such thing. If management purchased those shares with their own money, THEN it would say something. But even then, management can be wrong, and often has been.
With Apple, it's different. While I'm against share repurchaseing in principle, Apple has done it for a reason that really isn't saying that their shares should be worth more, and so this is going to prove they mean it. They are buying simply to equalize out the share growth over the years. Is that needed? I really don't think so, but it's not the worst thing.
The problem with share repurchasing is that it throws money away. It's GONE! Nothing can be done with it. And for most companies doing it, it doesn't result in share price accumulation over the long term.
That's why I prefer a dividend, or a disbursement. The money is actually going somewhere. It isn't being burned.
You clearly don't understand share repurchases. If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.
The money is no more 'gone' than share price increases. If the share owner wants to get some cash back, they are free to sell some of the shares.
Quote:
Originally Posted by melgross
It's actually not bad for tech companies. I don't remember what the average for them is, but I don't think it's far off.
Apple's up about $7.50 now.
That's a far cry from the people who were insisting that if Apple did a dividend that the share price would jump by 15% or so.[/quote]
You'll have to look at the Times article today in the business section. But the quote was this:
I don't know if they're talking about 30% more than the average of their foreign tax rate, or an actual 30% of the total. Whichever it is, it's a lot.
Companies pay taxes only on the difference over what they have already paid. So the Times is wrong if they implied anything else. (Incidentally, it would also mean a tax credit for jurisdictions where the rate is higher than the US rate; but those are few and inconsequential).
The effective rate can be more than 30%, especially for companies located in states such NY, CA, IL with high state tax rates.
And most of Apple's investments in plant and equipment for companies making their stuff, is abroad. Of course, those are really just upfront loans that result in big discounts and guaranteed supply, but still, it's cash being used.
They do invest here too though. Supposedly half the cost of building that giant Samsung plant in Texas to build Apple's SoC's was paid for by Apple.
I did some surfing... When that plant was being built, Sammy estimated that it would provide 500 full-time jobs. I assume that these are high-paying jobs, and there is a greater than 1:1 fan-out of lower-paying support jobs: custodial, restaurants, entertainment etc. for the entire community.
That, supposedly, was before any Apple involvement!
I guess you could say that Apple is kinda' into manufacturing high-tech components in the US.
That doesn't really apply. That discusses a share buy back where shares are taken out of circulation. Apple is not going to take shares out of circulation- they are going to reissue them, so it doesn't generate any of the benefits of a share buy back. It is no different than if Apple paid their employees with cash and the employees bought shares on the open market.
You clearly don't understand share repurchases. If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.
The money is no more 'gone' than share price increases. If the share owner wants to get some cash back, they are free to sell some of the shares.
That's a far cry from the people who were insisting that if Apple did a dividend that the share price would jump by 15% or so.
I understand share repurchases just fine. You don't recognize what happens in the real world. Besides, I've already stated in other posts that shares are being repurchased here for the reason of taking them out of circulation because of share number increases over the years. Perhaps you should read all of my posts before you comment.
You can state the academic reasons for anything, but theory and practice usually have a disconnect. That's true here as well.
So we're talking $15 billion per year yet Apple will surely have more net profit than that per year so we're looking at Apple's "war chest" continuing to grow and stay above $100 billion for the foreseeable future.
Companies pay taxes only on the difference over what they have already paid. So the Times is wrong if they implied anything else. (Incidentally, it would also mean a tax credit for jurisdictions where the rate is higher than the US rate; but those are few and inconsequential).
The effective rate can be more than 30%, especially for companies located in states such NY, CA, IL with high state tax rates.
Again, it's more complex than that. Some foreign cash is even taxed at the time it's made, at the full Us rate, I believe that called "passive income" such as dividends, etc. I haven't done work on this for some time.
But, from what I've seen, companies can be taxed at higher rates than the theoretical difference. It depends on a lot of factors. Apple, for example, as many other tech companies, doesn't pay 35%. They pay less. But that doesn't mean that their repatriation tax would reflect that.
So we're talking $15 billion per year yet Apple will surely have more net profit than that per year so we're looking at Apple's "war chest" continuing to grow and stay above $100 billion for the foreseeable future.
Sure, it's all about that foreign income which will only increase as a percentage of Apple sales and profits over the years. Not so long ago, most of Apple's sales and profits were made here. So this disconnect will only grow larger. I wonder how they'll handle it when foreign cash is 75% of holdings, 80%.
Else, give us a link please. Because we might plan our next holidays in this part of croatia.
It's a joke...
I've never been there (closest we got was Rome), but the Dalmatian Coast is supposed to be one of the most beautiful places in the world -- and Dubrovnik is the jewel in the crown.
Sigh! My late wife, Lucy -- the love of my life, was Croatian (dark hair, tan complexion and amazing blue eyes)... She was beautiful, stubborn, open to anything, funny... and a wink and smile that would melt the hardest heart! \
[/QUOTE]That's a far cry from the people who were insisting that if Apple did a dividend that the share price would jump by 15% or so.[/QUOTE]
The market is often delayed by a day or two, the analysts, investment consultants and others need a day to digest what is going on, they then advice their funds/investors etc on what they think and they in turn take another day to make a move.
That's a far cry from the people who were insisting that if Apple did a dividend that the share price would jump by 15% or so.[/QUOTE]
The market is often delayed by a day or two, the analysts, investment consultants and others need a day to digest what is going on, they then advice their funds/investors etc on what they think and they in turn take another day to make a move.
Believe or not, this forum is at the front lines.[/QUOTE]
Yeah... About 650 K shares traded at open, then dropped down to less than 100 K where it stays.
This is the best target I've seen:
Quote:
March 19 (Reuters) - Apple <AAPL.O>:
* Wedbush raises Apple <AAPL.O> price target to $750 from $585; rating
You clearly don't understand share repurchases. If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.
Thats wrong because the company has lost it's cash, which would be a loss equivalent to the gain of the stocks purchased, and cash should be factored into the cost of the shares. Imagine a company which has no revenue but has lots of cash ( its a funny company for sure, but this is a thought experiment). The company has $80B in the bank and 1 billion outstanding shares. The shares should be worth $80 each. If the company buys back 500M stock for $40B, the cash on hand falls to $40B, the 500 million remaining stock should still be worth $80 reflecting the book value of the company.
Even if you add on revenue that calculus still holds barring market sentiment, which is a mugs game.
Quote:
The money is no more 'gone' than share price increases. If the share owner wants to get some cash back, they are free to sell some of the shares.
They could have sold the stock yesterday for the same price. The money has in effect disappeared.
I wasn't trying to be cynical. I didn't realise stock yields were that low in general. I always thought people owned stocks for the dividends rather than the share price.
I don't invest in the stock market because I simply don't know enough about it to feel confident of not making a mistake. I follow Apple every day so I should have seen the big rise coming and invested a year ago but I used the money to set up a business instead so I can't complain.
I don't like the way analysts and banks manipulate the stock for their own gain. I would rather see dividends plus small monthly gains taking the stock price up gradually so that small investors see a gradual return on their investment and speculators are forced out.
It does seem low. But with the Fed having set interest rates at zero for a while and the foreseeable future, my savings account gets 0.2% or something ridiculously below inflation. And that's the official inflation rate which I think is under-reported.
In other words, as a rate it isn't bad. Without a DRIP (dividend re-investment plan) it is harder to do the compounding interest thing.
Share prices also take into account expected growth, which seems obvious but if you invest $100 and that stock goes up 5X, a 2% yield is something like a 10% yield on the money you put in.
Yield is a very important consideration for stocks whose price isn't going up but will still reward investors with solid dividends.
Buyback is good, gives shares to hard-working employees who grow the business.
Dividend's are bad, gives rich 'investors' even more money; even though they don't contribute at all to the way Apple is run. It's like a sportsman paying the owner of the sports club, as opposed to the owner paying the sportsman.
Surely, going from $370 in October 2011 to $590 in March 2012 is enough money for these 'investors'. Dividends are for companies with no room for growth, like Microsoft.
Just because you have money, doesn't mean you have to spend money.
Again, it's more complex than that. Some foreign cash is even taxed at the time it's made, at the full Us rate, I believe that called "passive income" such as dividends, etc. I haven't done work on this for some time.
Of course it's more complex. Neither of us is a tax expert. But passive income is fairly trivial for US companies (unlike EU and Asian companies that have considerable cross-holdings).
Quote:
Originally Posted by melgross
But, from what I've seen, companies can be taxed at higher rates than the theoretical difference. It depends on a lot of factors. Apple, for example, as many other tech companies, doesn't pay 35%. They pay less. But that doesn't mean that their repatriation tax would reflect that.
Tech companies often pay substantially less as an "effective" rate (typically, about 25% for companies such as Apple, Intel, Cisco, HP) because Congress gave them a tax credit on employee options exercised during the year (which get treated, for tax purposes, like money finally left the company to compensate the employee). That has nothing to do with the rate at which repatriated income is taxed.
Comments
You'll have to look at the Times article today in the business section. But the quote was this:
I don't know if they're talking about 30% more than the average of their foreign tax rate, or an actual 30% of the total. Whichever it is, it's a lot.
Thanks for the quote!
Are there any international corporate tax specialists out there that understand this and can 'splain it to us, the hoi polloi?
If they have to bring their money back, then you would be right. The fact that an estimated $1.2 trillion of US corporate cash (of an estimated total of $2 trillion) being held outside the US by companies tells me that they think $800B is plenty for whatever it is they want to do at home.
Indeed, most of the growth opportunities - and hence, investment needs - are abroad, rather than in mature economies such as the US.
And most of Apple's investments in plant and equipment for companies making their stuff, is abroad. Of course, those are really just upfront loans that result in big discounts and guaranteed supply, but still, it's cash being used.
They do invest here too though. Supposedly half the cost of building that giant Samsung plant in Texas to build Apple's SoC's was paid for by Apple.
found some answers to my questions
how do investors benefit with a stock buy back
http://beginnersinvest.about.com/od/.../aa091806a.htm
That doesn't really apply. That discusses a share buy back where shares are taken out of circulation. Apple is not going to take shares out of circulation- they are going to reissue them, so it doesn't generate any of the benefits of a share buy back. It is no different than if Apple paid their employees with cash and the employees bought shares on the open market.
Yeah. But a lot of that is Voodoo. The point is that generalizations about this, as with most other things, doesn't help in an individual situation. It isn't even correct in a number of ways.
Generally, share repurchasing is done to lift shares that are tottering, by supposedly showing that management has confidence that share prices will go higher in the future. Of course, in reality, is says no such thing. If management purchased those shares with their own money, THEN it would say something. But even then, management can be wrong, and often has been.
With Apple, it's different. While I'm against share repurchaseing in principle, Apple has done it for a reason that really isn't saying that their shares should be worth more, and so this is going to prove they mean it. They are buying simply to equalize out the share growth over the years. Is that needed? I really don't think so, but it's not the worst thing.
The problem with share repurchasing is that it throws money away. It's GONE! Nothing can be done with it. And for most companies doing it, it doesn't result in share price accumulation over the long term.
That's why I prefer a dividend, or a disbursement. The money is actually going somewhere. It isn't being burned.
You clearly don't understand share repurchases. If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.
The money is no more 'gone' than share price increases. If the share owner wants to get some cash back, they are free to sell some of the shares.
It's actually not bad for tech companies. I don't remember what the average for them is, but I don't think it's far off.
Apple's up about $7.50 now.
That's a far cry from the people who were insisting that if Apple did a dividend that the share price would jump by 15% or so.[/quote]
You'll have to look at the Times article today in the business section. But the quote was this:
I don't know if they're talking about 30% more than the average of their foreign tax rate, or an actual 30% of the total. Whichever it is, it's a lot.
Companies pay taxes only on the difference over what they have already paid. So the Times is wrong if they implied anything else. (Incidentally, it would also mean a tax credit for jurisdictions where the rate is higher than the US rate; but those are few and inconsequential).
The effective rate can be more than 30%, especially for companies located in states such NY, CA, IL with high state tax rates.
And most of Apple's investments in plant and equipment for companies making their stuff, is abroad. Of course, those are really just upfront loans that result in big discounts and guaranteed supply, but still, it's cash being used.
They do invest here too though. Supposedly half the cost of building that giant Samsung plant in Texas to build Apple's SoC's was paid for by Apple.
I did some surfing... When that plant was being built, Sammy estimated that it would provide 500 full-time jobs. I assume that these are high-paying jobs, and there is a greater than 1:1 fan-out of lower-paying support jobs: custodial, restaurants, entertainment etc. for the entire community.
That, supposedly, was before any Apple involvement!
I guess you could say that Apple is kinda' into manufacturing high-tech components in the US.
Are there any international corporate tax specialists out there that understand this and can 'splain it to us, the hoi polloi?
By no means an "international tax specialist," but see above.
That doesn't really apply. That discusses a share buy back where shares are taken out of circulation. Apple is not going to take shares out of circulation- they are going to reissue them, so it doesn't generate any of the benefits of a share buy back. It is no different than if Apple paid their employees with cash and the employees bought shares on the open market.
You clearly don't understand share repurchases. If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.
The money is no more 'gone' than share price increases. If the share owner wants to get some cash back, they are free to sell some of the shares.
That's a far cry from the people who were insisting that if Apple did a dividend that the share price would jump by 15% or so.
I understand share repurchases just fine. You don't recognize what happens in the real world. Besides, I've already stated in other posts that shares are being repurchased here for the reason of taking them out of circulation because of share number increases over the years. Perhaps you should read all of my posts before you comment.
You can state the academic reasons for anything, but theory and practice usually have a disconnect. That's true here as well.
Companies pay taxes only on the difference over what they have already paid. So the Times is wrong if they implied anything else. (Incidentally, it would also mean a tax credit for jurisdictions where the rate is higher than the US rate; but those are few and inconsequential).
The effective rate can be more than 30%, especially for companies located in states such NY, CA, IL with high state tax rates.
Again, it's more complex than that. Some foreign cash is even taxed at the time it's made, at the full Us rate, I believe that called "passive income" such as dividends, etc. I haven't done work on this for some time.
But, from what I've seen, companies can be taxed at higher rates than the theoretical difference. It depends on a lot of factors. Apple, for example, as many other tech companies, doesn't pay 35%. They pay less. But that doesn't mean that their repatriation tax would reflect that.
This just in...
Apple gets Dubrovnik City Council approval for plans for new World Headquarters:
This is a joke - is it?
Else, give us a link please. Because we might plan our next holidays in this part of croatia.
So we're talking $15 billion per year yet Apple will surely have more net profit than that per year so we're looking at Apple's "war chest" continuing to grow and stay above $100 billion for the foreseeable future.
Sure, it's all about that foreign income which will only increase as a percentage of Apple sales and profits over the years. Not so long ago, most of Apple's sales and profits were made here. So this disconnect will only grow larger. I wonder how they'll handle it when foreign cash is 75% of holdings, 80%.
By no means an "international tax specialist," but see above.
Thanks... It helps!
Especially the bit about the state taxes.
I don't know if it is still true, but when we lived in Las Vegas -- Nevada was very tax friendly...
No [personal] state income tax, very small state sales tax, freeport -- no warehousing taxes...
...The whole tax code was structured so that the "tourists" paid the bulk of the taxes.
The freeport advantage caused many California companies to warehouse product in Nevada -- creating jobs.
Lotsa' ways to skin a cat!
Yeah, all of this with domestic cash... waiting for a better tax environment to repatriate foreign cash...
I just love the way Peter and Tim parry questions that shouldn't be asked
I would guess the foreign cash would be used for the supply chain.
This is a joke - is it?
Else, give us a link please. Because we might plan our next holidays in this part of croatia.
It's a joke...
I've never been there (closest we got was Rome), but the Dalmatian Coast is supposed to be one of the most beautiful places in the world -- and Dubrovnik is the jewel in the crown.
Sigh! My late wife, Lucy -- the love of my life, was Croatian (dark hair, tan complexion and amazing blue eyes)... She was beautiful, stubborn, open to anything, funny... and a wink and smile that would melt the hardest heart!
The market is often delayed by a day or two, the analysts, investment consultants and others need a day to digest what is going on, they then advice their funds/investors etc on what they think and they in turn take another day to make a move.
Believe or not, this forum is at the front lines.
The market is often delayed by a day or two, the analysts, investment consultants and others need a day to digest what is going on, they then advice their funds/investors etc on what they think and they in turn take another day to make a move.
Believe or not, this forum is at the front lines.[/QUOTE]
Yeah... About 650 K shares traded at open, then dropped down to less than 100 K where it stays.
This is the best target I've seen:
March 19 (Reuters) - Apple <AAPL.O>:
* Wedbush raises Apple <AAPL.O> price target to $750 from $585; rating
outperform
You clearly don't understand share repurchases. If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.
Thats wrong because the company has lost it's cash, which would be a loss equivalent to the gain of the stocks purchased, and cash should be factored into the cost of the shares. Imagine a company which has no revenue but has lots of cash ( its a funny company for sure, but this is a thought experiment). The company has $80B in the bank and 1 billion outstanding shares. The shares should be worth $80 each. If the company buys back 500M stock for $40B, the cash on hand falls to $40B, the 500 million remaining stock should still be worth $80 reflecting the book value of the company.
Even if you add on revenue that calculus still holds barring market sentiment, which is a mugs game.
The money is no more 'gone' than share price increases. If the share owner wants to get some cash back, they are free to sell some of the shares.
They could have sold the stock yesterday for the same price. The money has in effect disappeared.
I wasn't trying to be cynical. I didn't realise stock yields were that low in general. I always thought people owned stocks for the dividends rather than the share price.
I don't invest in the stock market because I simply don't know enough about it to feel confident of not making a mistake. I follow Apple every day so I should have seen the big rise coming and invested a year ago but I used the money to set up a business instead so I can't complain.
I don't like the way analysts and banks manipulate the stock for their own gain. I would rather see dividends plus small monthly gains taking the stock price up gradually so that small investors see a gradual return on their investment and speculators are forced out.
It does seem low. But with the Fed having set interest rates at zero for a while and the foreseeable future, my savings account gets 0.2% or something ridiculously below inflation. And that's the official inflation rate which I think is under-reported.
In other words, as a rate it isn't bad. Without a DRIP (dividend re-investment plan) it is harder to do the compounding interest thing.
Share prices also take into account expected growth, which seems obvious but if you invest $100 and that stock goes up 5X, a 2% yield is something like a 10% yield on the money you put in.
Yield is a very important consideration for stocks whose price isn't going up but will still reward investors with solid dividends.
Dividend's are bad, gives rich 'investors' even more money; even though they don't contribute at all to the way Apple is run. It's like a sportsman paying the owner of the sports club, as opposed to the owner paying the sportsman.
Surely, going from $370 in October 2011 to $590 in March 2012 is enough money for these 'investors'. Dividends are for companies with no room for growth, like Microsoft.
Just because you have money, doesn't mean you have to spend money.
Again, it's more complex than that. Some foreign cash is even taxed at the time it's made, at the full Us rate, I believe that called "passive income" such as dividends, etc. I haven't done work on this for some time.
Of course it's more complex. Neither of us is a tax expert. But passive income is fairly trivial for US companies (unlike EU and Asian companies that have considerable cross-holdings).
But, from what I've seen, companies can be taxed at higher rates than the theoretical difference. It depends on a lot of factors. Apple, for example, as many other tech companies, doesn't pay 35%. They pay less. But that doesn't mean that their repatriation tax would reflect that.
Tech companies often pay substantially less as an "effective" rate (typically, about 25% for companies such as Apple, Intel, Cisco, HP) because Congress gave them a tax credit on employee options exercised during the year (which get treated, for tax purposes, like money finally left the company to compensate the employee). That has nothing to do with the rate at which repatriated income is taxed.