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  • How Apple Minimizes its Corporate Tax Burden

     In the latest installment of its "iEconomy" series, The New York Times takes a look

    at how Apple minimizes its corporate tax burden, taking advantage of a number of legal maneuvers and loopholes around the world. Apple's strategies are of course fully legal and used by many other corporations, but with a spotlight on Apple as it has rapidly risen to become the world's most valuable publicly-traded company with record-setting profits, it has obviously attracted much attention about how it handles its money.

    Apple, for instance, was among the first tech companies to designate overseas salespeople in high-tax countries in a manner that allowed them to sell on behalf of low-tax subsidiaries on other continents, sidestepping income taxes, according to former executives. Apple was a pioneer of an accounting technique known as the ?Double Irish With a Dutch Sandwich,? which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations ? some of which directly imitated Apple?s methods, say accountants at those companies.
    Among the tactics used by Apple:

    - Setting up subsidiaries in low-tax locations such as Nevada, Ireland, Netherlands, Luxembourg, and the British Virgin Islands, routing as much revenue as possible through these locations. By routing much of its U.S. revenue through its Braeburn Capital subsidiary in tax-free Reno, Nevada, Apple is able to avoid California's corporate tax rate of 8.84%, while also reducing its tax burden on money earned in other states.

    - Apple's iTunes S.à r.l. subsidiary in Luxembourg consists mainly of a mailbox and a few dozen employees, but records $1 billion per year in revenue as the entity responsible for all iTunes Store transactions throughout Europe, Africa, and the Middle East. With the iTunes Store offering strictly downloadable goods, Apple is able to take advantage of favorable tax treatment available in Luxembourg as part of the country's efforts to attract businesses.

    - Apple has substantial operations

    in Ireland, but the report notes that one of the main benefits of locating there is that Apple is able to internally transfer its patent royalty earnings to a subsidiary there, with the money being subjected to a 12.5% tax rate rather than the 35% tax rate found in the United States. More than one-third of Apple's worldwide revenue is booked through its Irish subsidiaries.

    - Apple records 70% of its revenue overseas, even though much of the product value would normally be considered to derive from their design, which occurs in the United States.


    Overall, Apple paid $3.3 billion in corporate taxes in 2011 on earnings of $34.2 billion in profits, an effective tax rate of 9.8%, which is considered low by corporate standards. But with the company's tactics relying on a complex and disjointed system of tax laws throughout the world, it is difficult for the United States to single-handedly require Apple to book more of its revenue in its home country, which currently has the highest corporate tax rates in the world when federal and average state rates are included.

    Apple has provided an official response

    to The New York Times, highlighting its role in job creation

    in the United States, the tax payments it does make, and its charitable giving. The company also notes that its business practices are in full compliance with all laws and accounting rules.


  • Apple Looking to Bring EPIX Movie Streaming to Apple TV, Potential Television Set

     Reuters reports

    that Apple has been negotiating with movie streaming service EPIX

    for the rights to stream content to the Apple TV set-top box. According to sources, the deal would also extend to future streaming devices such as the much-rumored Apple television set.

    Apple, which now sells a $99 set-top box that hooks up to a television set and lets users stream online content from Netflix and the MLB channel, opened discussions with three-year-old EPIX, created by Lions Gate Entertainment Corp, MGM and Viacom's Paramount Pictures.

    One of the sources told Reuters that any discussions would apply to its set-top box and also to upcoming devices that stream content.
    Sources note that talks between Apple and EPIX remain preliminary and that no deal is expected in the near future. Still, the rumors suggest that Apple is continuing to push forward in its attempts to secure content as it seeks to build a bigger footprint in the living room.

    EPIX has an exclusive streaming agreement with Netflix that extends through September, so it seems unlikely that any agreement with Apple could go into effect before that time, but it also remains unclear how the financial situation would shake out for EPIX in adding Apple while Netflix loses its exclusivity.


  • Apple Kills Off Chomp App Discovery Services for Android [iOS Blog]

     Following its late February acquisition

    of app search and discovery firm Chomp, Apple has now killed off Chomp's Android services.


    The move was reported late yesterday by a MacRumors reader who noticed that the Chomp app for Android had ceased functioning on his device, and GigaOM confirms

    that Chomp has also removed Android search functionality from the Chomp website

    .

    Apple reportedly paid about $50 million for Chomp, which also had a deal with Verizon to power its Android app search tools. That agreement will presumably be ending as Chomp completes its integration into Apple and focuses all of its attention on iOS.


  • Apple's Celebrity iPhone 4S Ads Score Well with Viewers

     Advertising tracking firm Ace Metrix

    today shared its data

    on viewer reactions to Apple's new celebrity iPhone 4S ads

    featuring Siri and starring Samuel L. Jackson and Zooey Deschanel. The new ads are registering well with consumers, generating scores higher than any other iPhone 4S ad released so far this year.

    ?Apple?s ads for iPhone had been falling rather flat earlier in the year, all scoring below the Apple iPhone norm of 620. This new creative tack that uses likeable celebrities struck a chord with American viewers,? said Peter Daboll, CEO of Ace Metrix. ?These ads performed very well, especially with younger women, who did not react as strongly to Apple's more feature-focused ads from earlier in the year. Celebrity ads are risky, as many celebrities can be polarizing. In these latest ads, Apple has chosen wisely, using celebrities with broad appeal."
    But while the new celebrity iPhone 4S performed very well, they were unable to unseat Samsung's top Galaxy Note as the most popular mobile phone ad of 2012. The Galaxy Note and iPhone 4S hold the top nine positions among mobile phone ads released so far this year, with Samsung's "Samsunged Again" Super Bowl commercial directly targeting Apple and iPhone users placing tenth.

    The new celebrity ads also fell short of Apple's iPhone 4S camera ad

    from late October, which was named the top mobile phone ad of 2011

    with a viewer score of 659.


  • Mac App Store Hits 10,000 Available Apps

     As pointed out by MacGeneration

    [Google translation

    ], Apple's Mac App Store has reached a new milestone with 10,000 apps available for purchase or free download through the marketplace.

    Our own sister site AppShopper

    confirms the milestone, currently indexing 10,339 applications in the store. Apple launched the Mac App Store in January 2011 and has quickly moved to offer its own major software titles through the marketplace, viewing it as the future of software distribution on the Mac platform. Even OS X Lion itself is distributed via the Mac App Store.

    The 10,000 Mac App Store apps pale in comparison to the 600,000 apps available through the iOS App Store, but the Mac App Store remains a success by desktop software sales standards. Last December, the store passed 100 million downloads

    , making it the "largest and fastest growing PC software store in the world".


  • Apple Expressing Frustration as Tax Incentives for Austin Expansion Remain in Limbo

     Last month, the State of Texas announced

    that Apple would be making a major expansion of its existing customer support and administrative campus in Austin, investing over $300 million to add 3,600 workers at the site. The move would more than double Apple's workforce in Austin.


    Over the past several weeks, a number of governmental agencies, including the State of Texas, Travis County, and the City of Austin have been working on tax break packages designed to secure Apple's commitment to bring the new jobs to Austin. While most of the incentive packages have been approved, the Austin American-Statesman reports

    that delays in work by Travis County are leaving Apple "frustrated" and the deal "in peril".

    Dave Porter, senior vice president for economic development at the Greater Austin Chamber of Commerce, said Thursday that Apple's plans to bring its Americas operations center to Austin are up in the air because of the county's continuing deliberations and calls for new conditions on its incentives deal with the company.

    "This deal is not done. It remains in peril. And Apple is frustrated," Porter said.
    Travis County had been expected to offer tax breaks of $5.4-6.4 million as part of the overall incentive package of $35-36 million over 10-15 years, and while Travis County had given initial approval to its portion of the deal earlier this month, it has yet to be finalized.

    The delays are related to objections raised by the opponents of the deal, who have claimed that the terms of the deal are too favorable for Apple and could see the company avoid penalties should it fail to meet some of the contract's terms.

    Apple had been said to also be considering Phoenix, Arizona as a potential location for its new facilities, and while it seems likely that the company would much prefer to locate the new facility at its existing campus in Austin, it is likely continuing to weigh its options until a final deal for the Austin site is signed.


  • Josh Gad Likely to Play Steve Wozniak in Steve Jobs Indie Film [Mac Blog]

     Progress continues on the independent film "Jobs", which will see Ashton Kutcher

    play the role of the Apple co-founder and CEO. According to Variety, actor Josh Gad is in talks to portray Steve Wozniak

    in the film, which will focus on the early days of Apple.

    Written by Matt Whiteley, pic chronicles Steve Jobs from wayward hippie to co-founder of Apple, where he became one of the most revered creative entrepreneurs of our time.

    Gad is making a deal to play Wozniak, who created the Apple I computer and co-created the Apple II computer in the mid-1970s.
    Gad is best known for his starring role in The Book of Mormon, a satirical Broadway musical from the creators of irreverent animated television show South Park. Gad has also held a number of other film, TV, and stage roles, and has occasionally served as a correspondent for The Daily Show.

    Production on "Jobs" is reportedly set to begin next month. The film is a separate project from the upcoming Sony Pictures film

    based on Walter Isaacson's authorized biography of Steve Jobs.

    (Photo by Taylor Hill / Getty Images)


  • Oracle Releases Java Development Kits for OS X as Work on Java SE 7 for Mac Continues

     Back in late 2010, Apple announced

    that it would cease supporting Java for OS X, with Steve Jobs noting

    that Apple was always a version behind that being distributed by Sun/Oracle, which handled Java for all other platforms.

    Confusion about whether Oracle would step into the Java void created by Apple's removal of support was addressed

    several weeks later when Apple and Oracle announced plans to expand Oracle's OpenJDK project to include OS X as a means to deliver Java SE 7 to Mac users.

    Oracle today announced that is taking the next step toward OS X compatibility with the release of Java SE 7 Update 4 and JavaFX 2.1

    . For Java developers, the update marks the first release of the Java Development Kit (JDK) and JavaFX Software Development Kit for OS X. The OpenJDK community is continuing its work on a consumer version of Java SE 7 for OS X, and Oracle says that a public release for consumers will be coming "later in 2012".

    This release marks Oracle?s first delivery of both the Java Development Kit (JDK) and JavaFX Software Development Kit (SDK) for Mac OS X.

    - Java developers can now download Oracle?s JDK, which includes the JavaFX SDK, for Mac OS X from the Oracle Technology Network (OTN).

    - Oracle plans to release a consumer version of Java SE 7, including the Java Runtime Environment (JRE) for Mac OS X later in 2012.
    While the transition to Oracle/OpenJDK for Java support on OS X continues, Steve Jobs' comments about Apple's Java packages always being a version behind and how that arrangement "may not be the best way to do it" proved prescient in recent weeks with the appearance of the Flashback malware. The latest incarnations of Flashback managed to infect over 600,000 Macs

    by taking advantage of a vulnerability in Java that had been patched by Oracle in February but which had not yet been patched on OS X.

    In response, Apple released several updates to Java for OS X, including one that disables

    the automatic execution of Java applets. As an additional layer of security, once a user manually turns on automatic execution, the system will once again disable it after a period of time if no applets have been executed.


  • Apple Stores Replace Kids' Table iMacs With iPads

     
    Apple has replaced the iMacs that were previously on the kids' table at its retail stores with iPads, as first noticed by iMore

    . The switch is a clear sign of the direction the company is going, particularly with regards to its younger customer base.

    The kids' table has been a staple of the Apple Retail Store since it the first locations opened more than 10 years ago. The original tables featured CRT iMacs surrounded by black balls from the Baleri Italia company

    for children to sit on. Apple, as is typical, spares no expense when it comes to its retail stores -- the chairs cost more than $500 each.

    Over the years, as the iMacs themselves have been updated, Apple has replaced the machines with newer models, but this is the first time that a product other than a Mac has been featured.


    (Image of old kids table courtesy Flickr/Ralph and Jenny

    )


MacRumors: Mac News and Rumors - All Stories Mon, 30 Apr 2012 04:04:06 PDT

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