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back to article Apple: You thought Google dodged taxes? Get a load of THIS

Apple has embarked on one of the biggest bond offerings in history as part of a ploy to avoid tax. Cupertino will soon begin issuing bonds in what will be one of the biggest debt sales of all time, it announced today. The plan is part of a scheme to funnel cash back to investors over the next three years. After its stock price …

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Mushroom

Popcorn please...

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Devil

Given that the US dollar is actually worthless

And thanks the US Federal Reserve (private bank with official sounding name) and it's fractional lending scam, the USA has trillions in debts, loans and interest that can never ever be paid on money that never existed, and so when the cash house of cards soon implodes, Apple, and all their worthless shares, composed of worthless money, for their worthless shareholders, will all evaporate.

So "Hooo Haaaa" for the Great American Delusion.

And "OMG - Were Doomed - Eat the children" when it comes.

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Boffin

"The market is going to be all over it,"

...said Todd Duvick, corporate credit analyst at Stifel Nicolaus. "It's a name that everyone follows and they're comfortable with. From a credit perspective it's going to be a good diversification name for a lot of accounts."

Spoken like a true salesman. IIRC there were a lot of people saying the same thing about Facebook's IPO.

We at El Reg know that Apple's new product pipeline is looking quite poor and this has been reflected in the 30%+ drop in its share price in the last 6 months (ie. the present value of growth opportunities has been heavily discounted by investors).

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JC_
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Re: Given that the US dollar is actually worthless

"Given that the US dollar is actually worthless"

If that's the case, then I'll happily give you £1 for every 10 of those worthless dollars you can find. If you prefer, I'll give you the equivalent of £1 in gold or bitcoin instead for those 10 dollars.

If you're not happy to take that offer then you might be full of shit...

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JC_
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Re: "The market is going to be all over it,"

"We at El Reg know that Apple's new product pipeline is looking quite poor "

Who's this "we", fandroid?

There's no risk in a bond issue for $16 billion when Apple already has nearly 10 times that in the bank and another 10 billion coming in every quarter.

Hate Apple (and MS...) all you want - it's your right to be pathetic - but try to stay vaguely attached to reality.

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Stop

Re: "The market is going to be all over it,"

The debt is more than covered by their overseas assets, so no risk attached to the bonds as far as I can see.

Problem is, what do they do next? At some point they'll have to spend the money they have overseas.

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FAIL

Re: "The market is going to be all over it,"

He didn't mention anything about his preferred range on mobile manufacturer.

I am an apple fan (and android, admittedly) myself but people like you are what gives us a bad name. Keep your vitriol to yourself please.

Even I can see Apple need to do something different, if not drastic, to make up the kudos they've lost with underwhelming products for the last two product generations.

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Ru
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Facepalm

the bonds will be issued through Goldman Sachs

Well, if you can't trust the giant vampire squid clamped to the face of humanity, who can you trust?

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JC_
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@reno79

The market is going to be all over it. There's simply no question of Apple paying off the bonds - they have 145 billion in the bank and earned another 9.5 billion in the last quarter. Anyone who questions their future ability to pay 16 billion - even if they literally just burn the bond money - is simply fantasizing. Bonds aren't equivalent to shares, let alone shares in an IPO.

As for my vitriol, Shagbag has earned it. Have a look at his posts - he's not only an Eadon-like fantasist, but also rather rude. If he can dish it out, he should be able to take it.

Not send from an iPhone 'cause I prefer Android & WP.

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Re: so no risk attached to the bonds as far as I can see

That's exactly what all those poor schlubs hawking and buying mortgage backed securities said before the bubble collapsed.

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Anonymous Coward

Re: Given that the US dollar is actually worthless

The Fed is a (private bank with official sounding name)?

You've been reading those loony illuminati/birther/shape-changing lizard overlords websites again, haven't you?

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Re: @reno79

I'm not sure how your first paragraph there has anything to do with my post. I didn't question the capability of one of the worlds richest organisations to repay this sum. 6 months and they'll have covered it.

What I mentioned was how Apple haven't really done anything radically different in their last two hardware revisions for their primary mobile devices (iPhone and iPad), and if we're allowed to forecast from their previous revisions of hardware for the next one, we won't see anything new in the 5S or next ipad, just a spec bump.

As a company they are now just iterating, rather than innovating and this has started to reflect in their faltering stock price. They have an opportunity to invest a huge amount of cash into their product range to bring something new out but aside from a watch (which to many is doomed to failure before it's even out, but that is just opinion) there is little sign of this thinking changing with Cupertino.

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Re: @reno79

I don't understand this 'innovating' thing. There has been no innovation in phones for a very very long time. Processors get faster, interfaces get slightly slicker, but no phone has delivered anything innovative or special in a long time. Anything I said for phones also applies to tablets; tablets are just big phones.

What I mentioned was how Apple haven't really done anything radically different in their last two hardware revisions for their primary mobile devices (iPhone and iPad), and if we're allowed to forecast from their previous revisions of hardware for the next one, we won't see anything new in the 5S or next ipad, just a spec bump.

Shocker! Phones to remain phone like.

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Anonymous Coward

Re: @reno79

Innovation?

But Apple was never involved in innovation - they had some nice design, yes, but Apple is really a marketing company.

The iPad? Not new - tablet PCs existed before - apple just made a bigger iPhone.

The IPhone? a PalmPilot crossed with a mobile phone.

The iPod? - less original than the iPhone really. Why do people think Apple created the MP3 player?

MacOS? - see Xerox parc

Apple 1 Computer? Well, it was assembled, unlike most other kits

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Paris Hilton

Re: @reno79

It don't matter at all.

Life is but a dream - all is not what it seam.

But maybe the "innovation" theme with the big A is really and merely: we do what people want technology to do when they did not know it in the first place?

And then it inspired?

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FAIL

Re: @reno79

Boring and inaccurate, nice work.

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Ru
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Re: @reno79

But Apple was never involved in innovation - they had some nice design, yes, but Apple is really a marketing company.

By those standards, surely no-one has innovated in the computer field since the 80s.

I'd argue that good design is very much a valuable innovation in and of itself. I have never owned an Apple product and I don't anticpate doing so any time soon, but it would be remiss of me to suggest that they've not had a substantial (and largely positive) impact on the technology I generally use. The fact I don't particularly like their products or their policies is orthogonal.

The IPhone? a PalmPilot crossed with a mobile phone

I'd go further than that and suggest it was crossed with a second rate mobile phone. No 3G, after all. Nonetheless, it was a substantial step up from its Symbian and Windows Phone driven contemporaries, and has basically driven the design of every smartphone since then. I certainly don't want to go back to using devices with pre-iphone interfaces, do you?

The iPod? - less original than the iPhone really

I don't particularly care for the iPod, but it did drive the creation of the first serious online music store with (more or less) world wide reach, with the result that the big and compacent Big Media companies finally had to sit up and pay attention to modern technologies instead of trying to step on them. Bit of engineering, lot of marketing, but ultimately they created something that no-one else had managed, and everyone one else has benefitted, no?

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Devil

Re: Given that the US dollar is actually worthless

Yeah OK... Gold for US dollars.

Your on.

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increased dividends?

My understanding was that apple paid no dividend, and as a result was sitting on mountains of cash.

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Anonymous Coward

Re: increased dividends?

They've been paying them for almost 2 years now.

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Trollface

Re: increased dividends?

Apple began a small dividend last year I believe. At the time I had assumed it would be a token dividend to help rationalize ownership of the stock to people who were strickly seeking dividend return. It currently sits at 1.85% yield which isn't great but isn't bad either in this market. Beats current US Inflation bonds by .09%

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Re: increased dividends?

$2.65 per share per quarter was the dividend announced last year. At $450/share that is 2.36%. Last week a $3.05 dividend was declared, 2.71% on $450.

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Anonymous Coward

Didn't Lehman Brothers try lending more money than they could cover when they caused the crash of 2008?

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All banks "relend" investment, it's how they create the credit in the first place, which is what powers the economy.

One view is that a "responsible" bank should hold enough assets at any time to cover a minimum of 20% of their exposure.

And although Lehmans practiced some truly irresponsible trading and lending, they were far from the cause of GFC (sounds catchier).

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Happy

Obvious joke of the day...

iDodgeTax

Plus interesting fact - the spell checker in Firefox wants to correct the above to "Bridget"!?

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Anonymous Coward

Only 35% in taxes ?

That's less than I'm paying each year, and there are hefty fines if I miss the deadline for filing my tax return.

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FAIL

Re: Only 35% in taxes ?

They're a company, you're an individual. Get over it, or setup a dodgy charity scam and wait for the taxman to knock on your door.

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Bod
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Re: Only 35% in taxes ?

"That's less than I'm paying each year, and there are hefty fines if I miss the deadline for filing my tax return."

You want to get yourself a good accountant and arrange your affairs legally to not let the revenue "to put the largest possible shovel in your stores" (q. Lord Clyde).

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Mushroom

Re: Only 35% in taxes ?

Are we supposed to be sorry for you that you don't know the tax code well enough to avoid paying too much or should we just laugh?

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Re: Only 35% in taxes ?

Yes, but that's the 35% the government gets before you have to pay your more than 35% on it. Assuming of course you own iStock.

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Companies are individuals too ..... albeit disguised in an artificial proxy

They're a company, you're an individual. Get over it, or setup a dodgy charity scam and wait for the taxman to knock on your door. ...Andrew Baines Posted Wednesday 1st May 2013 08:33 GMT

And quasi/pseudo religious misfits masquerading as faith foundations are another dodgy scam used to avoid taxation, Andrew Baines? ........ The Tony Blair Faith Foundation/P.O. Box 60519/London/W2 7JU/United Kingdom. The Tony Blair Faith Foundation is a charity registered in England, no1123243. The Tony Blair Faith Foundation is a company registered in England, no 06198959. Registered Office: 66 Lincoln Inn Fields/London/WC2A 3LH

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What will they do with the overseas assets?

If those overseas assets are never to be imported into the U.S., it would seem that Apple will have to export its expenses to make use of them. How?

Might it make good business sense to abandon the plans to build such a large and expensive "spaceship" in Cupertino and instead move people and R&D overseas?

Of course, might it make much better sense for the U.S. taxpayer for the tax laws to be changed to stop such a large loss of taxes from the big companies? As business becomes more and more global, the world is becoming more and more of a tax haven.

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Re: What will they do with the overseas assets?

They just sit and hope for the republicans to get back in and have another tax holiday for their rich friends so Apple can bring in the cash tax free.

I would not be surprised to learn that they have come up with a way to borrow in the US and payback overseas with tax free money.

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Re: What will they do with the overseas assets?

You forget that they buy a lot of stuff overseas already, not only assembly but also parts, etc.

As for the R&D bit, I'd prefer they keep it in the west somewhere. I've seen what R&D out of Asia is like.

As for the tax laws, they need serious overhaul, but the trick is getting the governments to act. No individual government wants to be the first to close the loopholes as they think they'll be at a disadvantage and companies will shift stuff around to minimise their tax exposure there and use the fact that other countries haven't caught up to their advantage. It requires co-ordinated action from multiple countries, and you've seen how well that has worked with such endeavours as emissions trading.

In other words, don't hold your breath. I think there is a better chance of the Monster Raving Loonie Party becoming a serious contender in UK politics than there is of co-ordinated tax avoidance reduction across the EU, let alone the rest of the world.

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Anonymous Coward

Re: What will they do with the overseas assets?

The really sad thing about this so called 'globalization' is that it pits poor nations against rich nations and workers in both countries are forced into a bidding war against each other which only enhances the income of multinationals.

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Re: What will they do with the overseas assets?

They have a huge amount of cash overseas, accrued profit from their operations there (generated from working cash flow: pay for expenses, collect revenue from sales).

Maybe they will use a big chunk of that cash to buy back their own stock, a move that was announced in parallel with the increased dividend payouts. One can envision Apple UK owning a piece of Apple USA, etc..

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Re: What will they do with the overseas assets?

Thats exactly what Apple will have to do if the government will not let Apple import their earnings back to the USA. The earnings are kept where they were earned, and taxed, and Apple (as with any other smartly managed company) is kept and reinvested where ever the greatest value is to be found.

Fools in government will borrow $785B to create a government-controlled "stimulus" but won't allow companies such as Apple to bring home foreign earnings without additional taxes. Apple could "stimulate" the US economy with $100B for no cost to the government or the taxpayer but for the fact the government is greedy and wants it for themselves.

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Re: What will they do with the overseas assets?

@David Kelly 2

The assumption with any of these repatriation schemes is that the money is used to invest in the USA. Generally it isn't. The last tax holiday for reparation back to the USA most of the funds went to stockholders and bondholders and bonuses to executives and things like that and did sweet F.A. to boost the economy.

Or to put it another way: rich people find ways of getting richer, but the rest are left to fend for themselves.

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Mushroom

Re: What will they do with the overseas assets?

"Or to put it another way: rich people find ways of getting richer, but the rest are left to fend for themselves."

God I hate that type of statement, isn't it truly amazing that some people really think that rich people simply stash all their money in a big safe to keep it away from all the grubby poor people?

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Anonymous Coward

Re: What will they do with the overseas assets?

"God I hate that type of statement, isn't it truly amazing that some people really think that rich people simply stash all their money in a big safe to keep it away from all the grubby poor people?"

Don't they?

I have no issue with people being rich. If money is your motivator, the got for it and earn your stake. BUT, conning the tax man by moving money about is a LOW LIFE activity (Schmit anyone). Others are paying your way which makes you a scum sucking money grabbing low life. You can't have it both ways.

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Re: What will they do with the overseas assets?

"God I hate that type of statement, isn't it truly amazing that some people really think that rich people simply stash all their money in a big safe to keep it away from all the grubby poor people?"

Isn't that exactly what Apple are doing here?

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Anonymous Coward

Re: What will they do with the overseas assets?

So all those bond/stock holders and receivers of bonuses just stuffed the cash under their beds then? None of them went out and spent the cash on new cars, houses and stuff that might actually help the economy a bit more than giving it to the government to line their pockets with. The first thing people do when the bonus doesn't come through is sack the nanny/cleaner which might be a bit of a pain for them but is a damn sight worse for the person being fired (who is, by the way, no longer paying tax on that money). Still, so long as we can stick it to 'the rich' who cares?

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Anonymous Coward

Re: What will they do with the overseas assets?

"So all those bond/stock holders and receivers of bonuses just stuffed the cash under their beds then? None of them went out and spent the cash on new cars, houses and stuff that might actually help the economy a bit more than giving it to the government to line their pockets with. The first thing people do when the bonus doesn't come through is sack the nanny/cleaner which might be a bit of a pain for them but is a damn sight worse for the person being fired (who is, by the way, no longer paying tax on that money). Still, so long as we can stick it to 'the rich' who cares?"

Missed the point! I thought the thread was tax avoidance, NOT bonus seekers. You need to stick to the point. No one has said contrary to what you have said.

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@AC

Keep reveling in your hatred of the rich and stay poor.

Even if the money all went back to the shareholders, the shareholders are the ones who put the money at risk, and the execs are the ones who took the chance on the business plan. Eventually they spend the money on something, and that powers the economy. Even if they just stick it in CDs at the bank, that makes money available to other businesses through bank loans. The rich don't get that wy by sitting on their asses.

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Re: What will they do with the overseas assets?

"The last tax holiday for reparation back to the USA most of the funds went to stockholders and bondholders and bonuses to executives and things like that and did sweet F.A. to boost the economy."

And the money going to stockholders and bondholders and executives will do what: either be spent in hte US economy or be invested again, anew, in the US economy. Which is the very definition of stimulus in fact.

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FAIL

Re: What will they do with the overseas assets?

Trickle down effect is nonsense, back when I did an econmics A Level they taught about the "Velocity of money".

The basic premise is if you give 1 person £1 billion, they can only spend so much on cars, women, houses, yachts, etc.. say £600 million of it is returned into the economy.

If you were to give a million people £1 million, most people would spend all of it so say £900 million is returned the to economy.

While those numbers are plucked out of thin air the basic theory goes as you concentrate wealth within a system the rate at which money within the system moves around slows down. At a certain point the econmy will stall. The wealth gap is important for this reason if you want a healthy economy you want hundreds of millionaires rather than a few billionaires

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Paris Hilton

Re: What will they do with the overseas assets?

BUT, conning the tax man by moving money about is a LOW LIFE activity (Schmit anyone).

Isn't this about conning the taxman by NOT moving your money around?

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Unhappy

Re: What will they do with the overseas assets?

@Tim

Really? What on earth makes you think that the reinvestment will be limited to the US economy? People outside the US are allowed to own stocks and bonds in US listed companies, and even if the stock and bond holders *do* live in the USA, there is nothing to force them to invest in US based companies or buy goods made in the USA . How many of them go out and buy Audis or BMWs or Mercs? OK, the dealer in the USA gets a cut but the rest probably goes overseas. Or maybe they invest in an private jet made by Airbus, Embraer, etc.

Also, I believe the last tax holiday was done because the companies themselves pledged to grow their US operations, hire more staff, etc. That might have happened with some of the money, but the vast majority of it went straight to the people who need it least, or they promptly outsourced everything to India or China and told their US workforce to get stuffed.

Trickle down economics doesn't work as well as its supporters claim. All that happens when you cut taxes for the upper 1% of the income bracket is that they have even more money that doesn't go to the bottom of the income bracket, that probably need it more. If a person has a net worth measured in hundreds of millions (or more) already, an extra 5% off the top rate of tax for them isn't suddenly make them go out and hire more gardeners or have some redecorate the house and actually pass on their wealth.

They're more likely to invest in companies and then demand said companies increase their profit margin by laying off their US staff and hiring overseas. Not exactly the stimulus you want, is it?

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Baling out an obscenely rich company by lending them money at crap interest rates?

...there's an app for that

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WTF?

So what happens when the bonds mature?

Apple will need to find more cash to pay them back. Will they issue more bonds? This could keep going forever but there is interest to pay and that is eventually going to be greater than 35% tax.

Maybe the bonds will be bought by overseas buyer and they can be repaid with offshore cash.

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