Apple’s Money Problem (& Why It Won’t Buy Netflix)

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Apple makes an astonishing amount of money but this presents an interesting challenge for the company and raises questions about what they should do with it all.
Credits
Music is Weekend in Tattoine [Youtube Audio Library]
Partially inspired but this wonderful article: http://www.asymco.com/2018/01/18/the-apple-cash-faq/
and https://www.aboveavalon.com/notes/2017/12/12/the-end-to-apples-cash-dilemma
https://www.macstories.net/news/apple-q1-2018-results-88-3-billion-revenue-77-3-million-iphones-13-2-million-ipads-sold/
https://www.aboveavalon.com/notes/2017/8/15/apple-has-the-best-business-model-for-generating-cash
https://www.irishtimes.com/business/apple-s-cash-mountain-how-it-avoids-tax-and-the-irish-link-1.3281734
http://www.businessinsider.com/how-much-money-big-companies-make-every-second-2017-12
http://www.everysecond.io/apple
For the airline ticket, here’s where I found the price: http://i.imgur.com/ejen79H.png
Fortune article is: http://fortune.com/2017/03/29/apple-ipad-2017/
Caption:
Every second apple makes 1444 dollars of . profit that's more than any other . company and almost as much as alphabet . microsoft and facebook combined a bank . account of two hundred and eighty five . billion dollars makes it more country. than company anyone else would kill for . pockets so deep but apple is wary and . while most companies beg not to be taxed . countries beg not to tax apple the . strange story of apple's finances . explains how it got so wealthy why this . is a problem and what they'll buy next . companies pay taxes to the country in . which their money is made a toy might be . invented and manufactured in antarctica . but if it's sold in germany that's where . it pays taxes and because these taxes. vary by country so do the costs of . products the iphone ten is a thousand . dollars in america but 1368 in india and . 1455 and hungary in fact if it weren't . for import taxes it'd be cheaper to fly . to the us buy an iphone and fly back but . there's an exception to every rule and . that exception is always america it's . the only country that taxes based on . citizenship that means a us citizen . living and working abroad still owes . taxes back to the us you could renounce . your citizenship but you'd be taxed for . that too and for american companies this . means paying the highest tax in the . world on profit made everywhere so this . won't fly when apple pays tax overseas . america subtracts that amount from its . tax rate and then reaches out its hand. this is where apple google almost every . major company says hmm actually i think . we're gonna keep our money out here for . now that money goes into a subsidiary a . company that's legally different but. really just a foreign bank account these . are located in countries like ireland . and jersey not for the cows but the very . generous tax code and ireland's economy. runs not despite being a tax shelter but . because of it what they lose in taxes . they make back from the jobs these big . companies bring so when the european . union stepped in and said hey apple . you've been getting far too fair a deal . time. pay your dues ireland rolled its eyes . and shook its head passing up on 5% of . its entire gdp but what about the 30 . percent of revenue apple makes in the us . well one way to pay less taxes is to . make less money at least on paper all of . apple's products depend on patents and . unlike people places and things patents . have no precise value making them a . handy way to move money so they give . their patents to the irish subsidiary. who then rents them back to apple for a . fee when apple makes money in the u. s. it can wink at the irs and say this . isn't profit we owe it to the owner of . the patent in ireland sorry america it's . just not our money to give this is how . profit escapes its country whether it's . made in spain or maine and technically. ireland taxes that money whether it . stays in the country or moves offshore . but where there's a will and 285 million . dollars there's a way if money is . transferred to the netherlands a handy . loophole makes it nearly tax free so it . briefly flashes an a dutch bank account . owned by a non-existent company with no . employees to take a legal box and then . it returns back to ireland this time a . subsidiary located in the country but. legally a resident of jersey where it . can finally retire to the cows and . castles in peace the richest meal for a . corporation isn't gold covered chocolate . or expensive caviar but an irish and . dutch subsidiary sandwich . all of this is 100% legal and 100% . common but because apple makes so much . more money it's in an unusual position . no matter how big the pile grows it's . all frozen just out of reach it's like . being given the world's largest bank . account with no atms to withdraw from. and the problem is actually much deeper . than that . [music]. to pay american bills apple takes . american loans money for which it. already has just not as far as the u. s. is concerned but it can't keep up with . how fast the pile is growing to you and . i this would be the opposite of a . problem because it's easy to imagine . apple as a giant fat cat swimming in . money and worrying only about how to . spend it all giving away billions would . be mere pocket change to someone that . wealthy and maybe it should pay higher . taxes but there is no singular apple the . ceos of the ceo are shareholders and . when someone buys a portion of the. company he does so in hopes of earning . more money tomorrow than he paid today . stocks can cost pennies or hundreds of . thousands of dollars but what matters is . how much that number changes and that's . the problem . to an individual money in a bank account . is money it can use but to a shareholder. all that money means nothing if it sits . watching grass grow that's money not . being invested in making twice as much . tomorrow. the desire to minimize taxes kept money . offshore but that made it useless for . what they care about most investing back . in the business but everything is about . to change . when the u. s. lowers its corporate tax . apple can finally bring back its money . the question now is how to spend it all . it may research future products acquire . small companies and buy back shares but . why not acquire something big articles . like this one suggest apple by tesla . activision and netflix and to an . investor this makes perfect sense . diversifying a business so dependent on . just one product and without making too . big a dent in its wallet but implied in . this argument is another if microsoft . and google successfully acquire . companies left and right but apple . rarely does they must be sleeping on the . job. microsoft just bought linkedin for eight . times more than apple's ever paid for a . single company but never assumed the . world's most profitable company is bad . with money. apple strategy is to shop for talent and . technologies never trying to make a . quick buck when it needed touch id it . bought authentic when it needed a voice . assistant it bought siri and when it . needed steve . it bought next suggesting they buy . activision or netflix is suggesting that . apple's stop being apple because . absorbing a company also means absorbing . its culture and forever changing its . most valuable asset extreme focus it's . the same reason they make so few . products and design them so minimally . saying no to what every other company . would say yes to is exactly what makes . apple so successful if you have thoughts . about apple how corporations should be . taxed or anything else you want to share . with the world you might be interested . in learning how to express those . thoughts with an animated video like . this one and the best way to do that is . with skill share a community of online . courses on everything from design to . business for example if you're . interested in animating your own videos . you might take a course like this one . the best way to learn is by doing and . with skill share you can practice by . following the course work of a . professional as they teach you how to . make graphics from scratch i have . absolutely no background or special . talent in design but i got better by . following courses like these and slowly . adding in my own style and i think you'd . be surprised by how affordable it is a . premium annual subscription cost less. than ten dollars a month but even better . the first 1,000 people to sign up at sk . lsh slash poly matter 3 link in the . description will get their first two . months for 99 cents you could be well on . your way to making videos like mine for . 99 cents in fact if you use skill share . to start a channel email me a link and . i'd be happy to take a look thanks to . skill share and to everyone who gives it . a try if you enjoyed this video you'd. probably also like the grand theory of . apple where i explain apples overarching . philosophy from why they remove the . headphone jack to how they prioritize . their products. [music]. .
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