This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Apple Would Do Better Spending that Cash

A Senate Subcommittee on Investigations is holding a hearing Tuesday on the rate Apple pays on its taxes, and how the company treats its tax stockpile. The subcommittee, led by Senators Carl Levin of Michigan and John McCain of Arizona, claims Apple has avoided taxes on about $44 billion in foreign profits by way of maneuvering that puts hundreds of billions in revenue outside the taxing authority of any country.

Of course, Apple defends its tax planning and the legality of its foreign cash stockpile.

"Apple complies fully with both the laws and spirit of the laws. And Apple pays all its required taxes, both in this country and abroad," Tim Cook, Apple CEO said to the subcommittee Tuesday.

While Cook conceded in his testimony that certain Apple subsidiaries based in Ireland effectively have no tax residence, few are claiming the company is in violation of the law or its spirit.

Instead, Apple's testimony Tuesday, is symptomatic of the larger issue of corporate tax laws that encourage U.s. corporations to hold over $1 trillion in foreign cash rather than using it to invest in their businesses. To be sure, the Senate gave similar scrutiny to Microsoft (MSFT) and Hewlett-Packard (HPQ) in a September hearing on similar grounds.

For Apple shareholders, Tuesday's hearing should be secondary.

Most investors in Apple haven't been made rich by the company's growing bank account. Instead, they've gained from the company's consistently innovative products and its reinvention of multiple consumer markets.

"Apple safeguards the capital entrusted to it by its shareholders with prudent management that reflects the Company's extensive international operations," Tim Cook said on Tuesday.

It's unclear whether Cook is correct in his assumptions.

While it may be penny-wise for Apple to hold onto foreign cash and wade into a politically charged debate on corporate taxation, investing that cash may actually be of a bigger long-term benefit to Apple shareholders.

Ireland Welcomes Watson Pharmaceuticals, an American Success

Johnson & Johnson Synthes Deal Revives Foreign Tax Debate

-- Written by Antoine Gara

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $126.44 0.00%
SCTY $52.27 0.00%
TSLA $280.02 0.00%
YHOO $39.38 0.00%
FB $87.28 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs