Not fraud - but part of that "not making any profits" was buying $1.5Bn of securities, which they presumably hope to sell for a profit at some point

It's just like saying, we made $1.5Bn but bought $1.5Bn worth of gold - therefore we didn't make any profit (and don't pay any tax) but we do own $1.5Bn worth of gold.

That bit wasn't in the article when I commented. But I'd be surprised if they aren't buying those investments with reserve cash on hand. It would be a strange piece of accounting to buy an investment with profits and claim not to have made any. Unless investments are part of the business of the company. There are plenty of ways to shift profits between years, although that's usually done to give smooth growth and keep the markets happy, or for 'kitchen sinking' all your losses into one quarter, not to make a small annual loss, and annoy shareholders.

The reason I used the word fraud was in comparison to making payments to another company and calling it franchise costs. The company with the shareholders should be the one holding the IP, as the profit is supposed to go to the owners (shareholders). Paying for use of IP to the parent company, seems to be a standard way to avoid corporation tax in subsidiaries in other countries.

Re: No dividends, ever, and no plans to start one

Paying a dividend says "we think we would be better returning this money to our share holders so they can invest it - in another company", not paying a dividend says "we think we can use this money to grow our business and it's share price"

Up to a point Lord Topper, up to a point...

Apple's cash pile is around $100 billion. They're not known as a company that makes big acquisitions. They've used large chunks of that cash to help grow, by buying up all the iPad sized touchscreens in the world for example, which I believe they did when the iPad 1 launched. At that point they only had about $50 billion in cash.

They didn't return that money then, nor did they use it, they simply grew it. And massively grew the company. They could plausibly launch an Apple TV and go mainstream in PCs at the same time and barely touch that cashpile, but hugely expand of the company. So the correct thing is to return it to shareholders somehow, and reassure them that you plan to grow the company some more.

Or, alternatively, say we're in a mature market now, we plan to expand slowly and look for new markets, but we're not seeking growth for the sake of it, and risking profitability. Growth is important, but profits are king, and growth often leads to a lack of profits.

Re: Question on this

Turtle_Fan,

Murdoch and family are large minority shareholders, with a successful history running things, so you need to get a large group to outvote him. There have been rumblings about that though. There's also a Saudi guy (not sure if privately or as representative of an investment group) who's close to Rupert, and I think their combined holdings get pretty close to 50%.

Obviously someone's got to run the company. If they're a major shareholder they're also hard to get rid of. CEOs always get disproportionate power. That's called the 'agent problem' by economists I believe. You can give the CEO stock (if they don't already have it) to try to align their interests with the shareholders, but the problem is they're often also getting paid, and after a certain amount people aren't always motivated purely by money. Or they'll irrationally prioritise the short-term bonus over the long-term value of their shares. I guess that's less likely with founder-CEOs, as they're more likely to care about the company they built, but are also more likely to see it as a personal plaything.

Re: Kindle

DrXym,

Cheers. That pretty much does in the BB. As you said earlier, great for techies, maybe not for all. When I looked she'd got 50-odd apps on her iPad, so she's using them, and finding them on her own without my help.

I'm waiting for someone to praise the Kindle to the heavens, and persuade me to look at that again. I'm partly put off by how bad the original Kindle Fire was. But I don't think they've got the apps either. Which is odd, surely any Android app could be on there as well, with little/no modification. All they'd need to do was support a bunch of the devs to port across.

You've got a point there. The article was a bit confused. Not only did it say that about Win7/Win8, but it also said the OEMs had ignored Microsoft's strategy, and then that this strategy had failed. Well both can't be true. Either MS's strategy has been tried and failed, or it's not been tried - in which case we don't know if it'll subsequently fail or not.

Re: Touch is ok for

Dave 15,

You are not the whole computer market. Other people's tastes may differ from yours. It's possible, shocking I know, that you're actually in a minority - in which case company's catering to your tastes will make less cash than those which ignore you.

Re: No dividends, ever, and no plans to start one

Alfred,

Yup, I agree with you. Stock buy-backs are the option that is allowed, and that's the route Apple always took before. Although didn't they pay their first dividend last year? I find it odd. I worked for a US company who actually proudly stated on their investor page on the website that they'd never paid a dividend. As if that were a good thing... Some companies need to remember who's money it is (a point I made below).

The tax games are to avoid corporation tax in various countries they operate in. If the overall company is not reporting profits to its shareholders, and siphoning off the cash into royalties/consultancies or somewhere, then they're committing fraud, which is rather different!

You're right to say that Bezos likes to expand. But perhaps he's forgotten who he's working for? I'm sure he's well paid, and has tremendous fun, and has no personal reason to care about profits. But at some point, the company needs to make serious cash. Making $20 billion of sales and close to rounding errors of profit is a total waste of time and money. You can get a 4% return putting your money into the bank (assuming it doesn't go bust), and inflation is around 2-3%, so you need to make at least a 4% profit to be worth investing the cash at all. You might argue 7-10%, if that's what you could get putting your money into a tracker fund. If you spend 20 years growing the business and making nothing, then after 20 years you're then going to need to make obscene, insane profits for the effort not to have been a waste of the shareholders' money.

Admittedly man does not live by bread alone, and you might argue Amazon are building something useful. But Bill Gates can do that, because he's spending his own money on his own projects. Jeff Bezos is currently playing with other peoples', so it's their trainset, not his. That's the downside of taking your company public, you're no longer supposed to control it. It's also the danger of companies like Facebook, where Zuckerberg has controlling shares, but not a controlling financial interest. His company structure wouldn't be legal in the UK, because he gets to outvote the actual owners of the company. I think he owns about 10%, but has over 50% of the voting stock. Google have similar lopsided voting rights, but not as mad as that.

Re: No dividends, ever, and no plans to start one

A lot of US companies don't pay divvies. It seems to be a standard thing (especially in the tech sector) - and I think it's partly down to the tax treatment of dividends. As I understand it, It's more tax-efficient to make your profit on stock price increase than it is to take cash in dividend payments. So shareholders often seem happy to accept these huge cash-piles doing nothing very much.

If Tim Worstall were here, I'm sure he'd say that's a clear case of taxation distorting the market, and harming growth. Companies are going to be less likely to invest their cash piles as well as if that money was being used for something productive. Admittedly Tim Cook used something like $10bn to pre-purchase lots of stuff in the supply chain, thus making more profits on the iPhone/iPad, but the other $90-odd billion is probably less well used.

Re: Cashflow != ignore

Also, cashflow gives you a clue when the profits figure has been made up. If a company claiming to make large profits has negative cashflow, then you need to wonder why.

Isn't that what Global Crossing and Worldcom were doing back in the dot.com bust? Doing data traffic swaps with each other and booking it as profitable revenue, when all they were actually doing was swapping cash between them?

Re: Crapware Payload

Any user of Oracle products is used to their practices. There are times that they make CA seem good.

A friend of mine worked for CA, and he said that they aspired to be as evil as Oracle, but weren't competent enough to manage it.

Working for them was not a happy experience either. The saddest part was the people who left CA (possibly only joining after their company was bought out), and were in a company that CA subsequently also bought.. Then got made redundant. There were people who'd been through this cycle more than once.

I don't like the price of the iPad Mini. Although to be fair to Apple, they're apparently making lower margins on it than normal iPads, so maybe it's not the rip-off it looks at first. It's just that it's not that much cheaper, for a much worse screen.

I'm hoping that Android won't be too hard. We'll have to see in the shop. Being able to touch the UI seems to be a bit more 'friendly' for some people than the old mouse interface. Maybe it's just that with limited screen space and fat fingers, devs are more obvious with where the buttons are. Children who can't read can find the right icon to press on apps they've never seen before. I also think people are less scared of 'breaking' tablets, whereas they won't just try all the options on a PC program until they get the right one, unless something goes wrong...

Admittedly her grandchildren use iPads faster than Mum does, but she's getting there. My memory of Android was that it was easy enough to use, once set up. Here's hoping for a working model to play with in the shops.

Spudders,

Thanks for the answer. How easy is it to sideload? Is it a question of just going to the Play Store? Or do you have to find a binary somewhere, and install it onto the tablet from a computer?

I'll probably set the tablet up for her. So I can find a bunch of useful Android apps and bung them on, so long as they work as expected. However, if they're going to have a different UI and be a bit on the buggy side, then that's a solution for a techy, but not one to hand over to a normal user.

Re: Facebook are doing lots of other things - like claiming to delete accounts and data

I believe one of Facebook's tricks is to rely on email address. They've been harvesting people's whole address books from their smartphone apps, so they've then got an automatic 'friends' list for you when you sign up (assuming you use the email your friends have anyway).

I've been on there for about 2 years, for family stuff. I think I posted twice in 2012, and I always log out. But I'm getting concerned about all the data they're mining about me from links. And of course I don't control the privacy policies of my 'friends' even if I lock down all my stuff, and assume they actually don't ignore my privacy settings. I have no trust in Facebook to do that...

Once people start tagging me in photos, I don't have any control of that. So I'm wondering if it's time to quit, before it's too late. And to think I used to be worried about Google's sinister data collection habits...

Re: Sales direct from Apple included?

diodesign,

Thanks for the reply. What's happened to your red vulture icon?

As you say, it's interesting to see the Playbook doing so well. And to see the Nexus doing so 'badly'... I wonder if that's because Google are selling them direct in large numbers? I'd have thought they'd get more of their sales via the Channel, rather than the Play Store. But maybe they're going to become a big player in sales. I don't understand why though, given how bad they've been at customer service, and how little effort they seem to have made to improve that.

Re: Sales direct from Apple included?

Seeing as there seem to be so many Followers of the Blackberry God here, I wonder if I might pick your brains about whether it's worth suggesting it to my Mum. She's looking at the iPad Mini or Google Nexus 7, and I hadn't considered the Playbook.

Basically I need to know if it does BBC iPlayer, 4oD and ITV Player, as well as some silly games for the grandchildren and is easy enough to use.

Actually, rather than hijack the thread, probably best if I create a topic in the user forums I guess... So here goes.

Shagbag,

I think in terms of UI, then iOS is a bit easier to master than Android. Android gives you a lot more options and ways to set it up, as well as being a lot more likely to dump you into long menus. iOS is a lot less configurable. That's the price you pay for flexibility.

However, as you say, getting content onto an iDevice can be a total pain in the arse. Unless, of course, you buy it all from Apple, in which case it's go to iTunes (which already has your credit card of course), press button, receive bacon. I'm sure there's no connection at all between the difficulty of getting your own media on there, and the fact that Apple make money from selling it to you...

iTunes is perfectly fine for basic synching of music and podcasts. It's crap at synching photos though, as iTunes doesn't seem to be able to watch the Pictures folder and fetch more when it's added to. You have to manually tell it where the new piccies are. Something I have to teach my Mum to do this week - wish me luck! I suspect iTunes on Mac can manage that. Getting books on there is an equally manual, and obscure, process - unless you use iBooks, the Kindle app, or the like.

Although, I haven't played with iCloud. It's possible that you could just drag and drop from computer to iCloud and have it synch with the iPad?

Re: Sales direct from Apple included?

I wondered that. The article seems to suggest they don't. Although it's not exactly clear. If so, it also isn't going to capture all the sales of Google Nexus 7s, assuming many of them are going through the play store. As well as ignoring the Kindle Fire, which I don't think was in shops until this month.

I'm surprised the Blackberry is doing so well, although as UK teenagers are some of RIM's most stalwart customers, maybe it made sense to parents to get the tablet to match their phone?

I guess I need to take another look (a first one really) at the Playbook. My Mum wants a 7" tablet, I've persuaded her away from the Kindle Fire, so she's deciding between iPad Mini and Nexus 7. Perhaps a pootle on a Playbook might interest her?

Re: so basically if they hadn't axed symbian

I read (I think one of Orlowski's articles?) that the original Lumia's weren't built by Nokia, but were outsourced. Not sure if that was design as well as manufacture. Although the lack of SD cards was down to Microsoft. I believe WP8 now supports them, whereas WP7 didn't. HTC seemed to use them as cheap (non-removable) storage for some reason. Did MS change the spec at the last minute perhaps?

I've also seen suggestions that Nokia over-ordered, hence having a bunch of phones left over in Q3 last year, that they had to dump pretty sharp-ish. We were looking at an upgrade to the company mobiles and we could pick up Lumia 800s very cheaply, at the same price as some of the crappy Android 2.3 cheapies that were still knocking around last year.

It'll be interesting to see if Nokia can keep the current Lumia range around their current prices, or if they'll have to discount heavily in order to keep the sales going. My impression is that a lot of their sales were the Lumia 710 last year, which was released at £300, but I suspect sold mostly between £150-£200. I certainly saw it on sale at those prices a lot. Bought mine for £130. The hardware ought to have been pretty cheap, and it's fine for what I paid for it - though not spectacular. And I don't think it was ever worth £300.

It would be interesting to see some proper figures from Nokia. They've paying big license fees to MS, but then they're getting a $1billion 'support' payment. I wonder what they were paying for the hardware? The Lumia 800/900 looked well enough built, the 710 and 610 much less so.

Don't forget the tapes? You've got to have giant reel-to-reel tape recorders, or it ain't a proper computer!

I agree with you on the sheer excellent-ousity of getting it working again though.

Re: Android

How are HTC doing Eadon?

Re: so basically if they hadn't axed symbian

Jess,

If they'd have kept Symbian, they'd almost certainly have sold more phones. However, there's a big 'but' in here. They weren't making very much profit on their Symbian phones, and the year Elop dumped it, they were getting lower margins on each Symbian sale. So it's possible they might have made a loss on higher sales. In general, profits are better than losses...

It's a hypothetical - unless you have access to a time machine. Could Symbian have survived the £100 Androids, some of which are now quite good? It's impossible to know. From the hideous way RIM's sales have fallen off a cliff in the last 2 years, it's entirely possible that Symbian might not be selling any phones at a profit now (or even at all), or Nokia could still be making a few quid per phone on 50 million handsets. It's even possible that Elop could have beaten up on middle management and got some of Nokia's great R&D through the production pipeline and got Symbian up-to-date by now. He obviously didn't believe that.

I didn't think El Reg moderated for swearing. Something I've done on here a few times. Perhaps I should do a test. A different swearword each day, to see what effect it has...

I remember being a moderator on a large site that didn't allow swearing. We were even supposed to stop the fcuk's of this world. Which was particularly difficult on the Irish forum. You seemingly can't tell an Irishman not to say feck. You certainly can't stop them doing it...

Re: "If Elop was not a Trojan horse, then he would have kept Symbian and Meego alive"

Elops destruction of Nokia only makes sense if he's a trojan horse, nothing else fits.

Eadon,

Nope. It really isn't. There really are more than one possible explanation for most phenomena. Particularly when information isn't clear, and so much depends on personalities/intentions/mistakes.

Please try to use your brain and think before engaging your prejudices. And maybe comment a bit less on MS stories. Oh and while I'm asking, please stop screaming shill every 5 minutes as well...

Elop may be the Trojan horse sent by MS to destroy Nokia. Except he didn't work for MS for that long, and if this book is to be believed* (which I'm not sure I do), Elop was dumped as a threat to Ballmer. Also why did Nokia pick him? What would cause them to pick a Trojan Horse, and allow him to make all his recent decisions. Remember what can happen to CEOs who do 'burning platform' speeches? Ask Leo Apotheker. HP's board (who've been seen as pretty crap at oversight themselves) dumped him right quick when he talked about selling off the PC division. Shame they didn't stop him buying Autonomy...

Given Nokia's recent incompetence - over at least the last 5 years - I'd say it's pretty fair to assume one of the huge problems with Nokia was Nokia management. Which was true both before and after they hired Elop. They had some great R&D, but couldn't stop fighting each other long enough to get any of it to market. Which then makes his decision to dump their internal stuff (which was improving) for an outside product more explicable. Even if MS's product wasn't particularly ready either. Having to break compatibility for WP8 and still not getting all the UI changes done means it's still not totally read now! But then could Nokia have got Hanrattan/Meego/Maemo working any faster? Asha is pretty good by all accounts, but that's not aimed at high-end kit. So it'll never be very profitable. The profit's all in the £400-£500 phones that cost £200-£250 to build.

*I don't think I believe the book. I mostly agree with you on Ballmer. He seems to have made too many screw-ups. I don't think you can totally blame him for Vista, that was going on when he took over, and I guess Server&Tools seems to have been doing quite well. I've no idea whether Bing was worth the effort or not. But they certainly dropped the ball on phones (where they had about 50% of the smartphone market in 2005, from memory). Had they continued to develop a phone OS, then they'd have been properly positioned to try a tablet earlier as well. I'm not sure about Win8, WinRT, WP8. Trying to merge everything might be a great idea, or too clever by half. Just allowing people to turn off Metro in Win 8 would have saved so much bad PR though that it looks like a horrible error to have been so dogmatic. Which would be a good reason to dump Sinofsky, expect they did that before they knew what sales would be, and they didn't change anything, so that doesn't seem to stack up as an explanation.

The UK negotiated a discount when their economy was in shambles. Now that the EU helped them to recover, they're unwilling to give a fair share and menace to leave.

What a load of old bollocks. Unless you mean something different - which you'd need to explain better than that link to general spending.

Britain has always been a net contributor to the EU/EC/EEC. Even back in the 1970s when people laughed at us, and called us 'the sick man of Europe'. That's back in the days when Britain was one of the poorest members (partly because the EEC was smaller, with richer countries in). The rebate was agreed with Thatcher after a lot of years of negotiation because British net EC contributions were about to go above West Germany's even though Germany was massively richer than Britain, and France were still a net recipient of EC spending. France were of course, also richer than us... The shock to the system for the poor French is that they're now the 3rd biggest net contributor, when they've been taking money out of the EU (even as one of it's richest members) up until the last decade. Aw poor Fwance...

Also, rather than the EU helping Britain, we actually agreed to reduce the rebate as otherwise, due to the odd way it's calculated, Poland would have ended up a net contributor to the EU budget, rather than receiving from it. This was done because it was fair, and also with the promise of unspecified reform of CAP in future. Of course that promise was broken by France and Germany. There are reasons that British voters and politicians are suspicious of dealing with the EU...

While we're not perfect, and we've never managed to quite 'fit in' due to having a weird political system, we've always paid our way and pulled our weight. Even if we've complained about it...

Re: Is there a flag somewhere to suggest which category?

Andrew Orlowski's articles are usually delay moderated. I assume they mod the comments in order, but it will still seem like others are being approved ahead of you (filling up the thread), as they'll have posted first but also been awaiting the mod's nod.

Re: I get offended by people getting offended by this...

going to write a strongly worded letter to the BBC about this

NomNomNom,

Let me help you with that letter:

Dear BBC,

I don't hold with all this sex on television. I keep falling off!

Yours,

Colonel Titfield-Thunderbolt O.B.E. D.S.O & bar and looney