Unlikely! Don’t get me wrong. I love the cylindrical look of the new MacPro. The bells and whistles are like, “wow!”
I followed at least some of what Apple founder Steve Jobs said or did during his remarkable life, including, of course, that regulation commencement at Stanford.
Our home, and the office, are embedded in Apple’s ecosystem; and I think Jobs’s successor, Tim Cook, and chief designer Jonny Ive, wear the crown with aplomb.
Yet, we must worry about the company’s future. Not because of what they do (or don’t), but the environment in which their law makers live.
First, few on Capitol Hill seem to care that to reach even 5 per cent profit growth, Cook needs to stir up some $2.5 billion a year. This is what most innovative companies don’t earn in years.
Also, the guys at Samsung may have their ups and downs. But like the time when Nadal finally started catching up with Federer, Samsung’s chase seems more credible with each quarter.
But the heart of Apple’s fault line is that U.S. law makers are out to sully Cook’s complex recipe of overseas tax havens. This, not any deficit in design genius, will force Apple to look a lot less prettier than Samsung.
A Senate subcommittee has found that Apple considers three key subsidiaries, all based in Ireland, to have no tax jurisdiction at all. One of those Irish affiliates, Apple Sales International (ASI), reported sales income of $74 billion over four years but paid hardly any tax. In 2011 ASI had pre-tax earnings of $22 billion but paid just $10 million in tax, a rate of 0.05 per cent.
So, fellow Apple fans, read the tea leaves in what was clinched at this Permanent Sub-Committee on Investigations on May 21, 2013.
“Our foreign subsidiaries hold 70 per cent of our cash because of the rapid growth of our international business. We use these earnings to fund our foreign operations, such as spending billions of dollars to acquire new equipment to make Apple products, and to finance construction of Apple retail stores around the world. Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital,” Cook said.
Then he offered the olive branch:”The product will (increasingly) be assembled in Texas, include components made in Illinois and Florida, and rely on equipment produced in Kentucky and Michigan.” (http://www.apple.com/pr/pdf/timcookopeningstatement.pdf)
The formal announcement came during the Mac Pro launch Monday. It isn’t out of love for U.S.Inc..
Making the Mac Pro entirely in the U.S. is terrific for forced patriotism. But it’s a risky wager on costs. More so with the dollar hardening.
For those who just tuned in, Apple is barely a U.S. product. Its “A5” processors were made by Samsung out of Austin, Texas; and Corning made the iphone’s glass in Kentucky, but not much beyond that.
It is premature, of course, to remind ourselves of the fate of the Original 30 in the Dow Jones Index launched in 1896. GE, entered in 1907, is the longest survivor.
(The columnist is CEO & Co-Founder, India Strategy Group, Hammurabi & Solomon. Tweets @therohitbansal).