Apple Bites Back at EU; IMF Chief Found Guilty But She’s Still Allright; Lands’ End Going for New Beginning with Latest CEO

An inconvenient target…

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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

The EU might be demanding a whopping $14 billion from Apple, but it’s not going to happen so quickly. Or easily. Or at all, if Apple has its way. Back in 2014, the EU accused Ireland of skirting international tax laws when it let Apple park tens of billions of dollars there in order to keep it from getting into the grubby hands of pesky tax collectors. Apparently, Apple only paid a corporate tax rate of 3.8% on $200 billion of overseas profits. In exchange for keeping its profits there, Apple kept jobs there, all safe and secure. The EU said the tax deal amounted to illegal state aid and Apple needs to cough up the record setting fine. Both Apple and Ireland deny that they did anything wrong and think the EU needs to get its stories straight.  Apple says it was singled out by the EU because of its massive success – “a convenient target” as its lawyer so eloquently put it, and that the EU commission conveniently blew off tax experts that were brought in special by authorities in Ireland.  In the meantime, Ireland says that other countries should close their own loopholes and is accusing the EU of overstepping its boundaries as it interferes in member states’ sovereign affairs.

Guilty but not…

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Image courtesy of Sira Anamwong/FreeDigitalOhotos.net

She may have been found guilty of negligence over a payout that happened back in 2008, but it’s not entirely clear if IMF Chief Christine Lagarde is actually guilty of anything.  The trouble started when Lagarde was France’s Finance Minister. Her boss was none other than President Nicholas Sarkozy (half-brother-in-law to Mary-Kate Olsen, fyi). President Sarkozy’s good buddy was this tycoon named Bernard Tapie who got really angry with the French government and then sued it. You see, Tapie sold his stake in athletic company, Adidas, to French bank Credit Lyonnais, which as luck would have it, was state owned. The bank then went ahead and sold that very same stake for a whole lot more money than what Tapie was paid. Tapie cried fraud on the government and became embroiled in a fifteen year legal battle. Enter Lagarde, who against official advice, recommended private arbitration in lieu of continuing to pursue the expensive legal battle. Tapie was awarded an outrageously high 400 million euros (roughly $417 million), and for this Lagarde was found guilty because she didn’t contest the award (which came from public funds, mind you). Incidentally, investigators suspected that the arbitration process was not kosher and was actually rigged in Tapie’s favor. He has since been ordered to pay the award back. In the meantime, Lagarde isn’t even facing any jail time, much less a fine. That’s because the state, according to its own opinion, had a weak case, while Lagarde has an excellent reputation and is in good international standing. Boom.

Canvas is so last year…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Lands’ End is going luxe again. After dumping its posh CEO, Federica Marchionni – after less than two years –  the company just announced it hired Jerome Griffith, formerly of Tumi, who just this year wrapped up selling the company to Samsonite Luggage to the tune of $1.8 billion. Griffith also held posts at Gap Inc. and Tommy Hilfiger and has a solid reputation for turning companies around. It was only three months ago that the company booted Marchionni, who previously held posts at Dolce & Gabbana and Ferrari. But alas, she couldn’t make it past the two year mark, as her vision for making Lands’ End an upscale brand, via the Canvas line, did not resonate with a customer bas that wasn’t even looking for upscale. Hence, she went the way of acid wash and parachute pants. Her vision was, in fact, so at odds with the Lands’ End customer base that the company had to eat a $4.4 million loss from the line.  The company also didn’t care for the fact that she stayed put in New York while Lands’ End offices were already comfortably situated in Wisconsin. Geography won’t be an issue for Griffith who is gearing up to set up house and home in the in the state. Lands’s End is counting on Griffith’s business acumen. During his run at Tumi, he saw revenues increase from $196 million in 2009 to $547 million in 2015.  And Lands’ End needs all the help it can get after watching its sales take in a loss last year of close to $20 million.

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EU Wants to Take a Big Tax Bite Out of Apple; Google Takes On Uber. Sort of; Abercrombie & Fitch Teen Ditch

Bite me…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The EU commission is coming down hard on Apple by slapping the world’s most valuable company with a $14.5 billion bill for back taxes. The EU felt Apple illegally received tax aid in the form of a sweetheart tax deal from Ireland. However, both Apple and Ireland deny that allegation and contend that everything they did was totally legit. More than 700 U.S. companies currently have some type of business set up in Ireland where they enjoy a reduced corporate tax rate compared to that of the U.S. The EU however says that rate is too reduced and says Apple pays much MUCH less than the 12.5% corporate tax rate in the country. Companies can set up tax structures that allow them to pay even less.  EU officials charge that Apple did just that and Apple paid only a .005% rate on its profits in 2014.  I’d love to meet Apple’s accountants who set that one up. Just saying. The U.S treasury isn’t happy about the situation either and feels U.S.firms are being unfairly targeted and that such investigations are unfair. Senator Chuck Schumer even called this latest judgement a “cheap money grab.” Don’t expect to bump into him on your next European vacay. According to the treasury, judgements of this type could undermine U.S. investments in Europe. Starbucks already got hit with a $33 million back-tax deal while Amazon and McDonald’s are currently staring at the wrong end of their own EU investigations. The government believes that U.S. taxpayers will likely bear the brunt of the EU’s very inconvenient decision because Apple would basically deduct the $14.5 billion from taxes that it owes to the U.S. government.

Anything you can do Google can do better…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Search engine giant, Google, is now offering its own ride-sharing app to San Francisco residents. If you’re thinking Google’s encroaching on Uber and Lyft’s turf then…you might be right. Sort of. Google began a pilot program back in May that allows commuters to carpool at cheaper rates then Uber and Lyft. Much cheaper. In fact, the rates are so cheap – think 54 cents per mile – that there is no incentive to even become a taxi driver. What’s more is that Google doesn’t even take a cut. Yet. By using Waze, which Google acquired back in 2013, commuters connect with other commuters headed in the same direction. Uber, which is currently valued at around $68 billion might begin to take issue with Google’s latest plans, assuming they’ll expand. And they will. Ironically, Google invested $258 million into Uber back in 2013. The situation between the two companies has gotten quite dicey as Google exec David Drummond recently resigned from Uber’s board given all the conflicts that are rising from these latest developments.

Smells like twenty-something spirit…

 

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Abercrombie & Fitch, purveyor of trendy teen clothing, has officially posted its fourteenth straight quarter of losses. The company saw a decline of a 4%, which was more than what was expected. A&F posted a net loss of $13 million, which was a brutal change from last year’s same quarter loss of $810,000. Net sales fell to $783, a far cry from last year’s $818 million. Naturally, as with all bad earnings reports, a tumble in shares ensued, with shares of the trendy retailer taking a 20% hit. Besides a strong dollar, the chain can’t compete with the likes of H&M, Zara and a whole bunch of other clothing sellers. Back in May, the company had predicted an improvement. But that didn’t happen and now A&F isn’t even expecting one in the near future. Which might explain why the company will reshift its focus from teens to bona-fide money making twenty-somethngs who can afford the clothes A&F is selling. Considering that more than 50% of A&F’s customers are adults over the age of 20, this seems like a prudent move. So if you find yourself at one of A&F’s 744 locations – of which 60 of them will be closing –  you might not want to be so quick to walk away as the company attempts to rebrand itself as the “iconic American casual luxury brand.” I don’t know why that just made me think of Harley-Davidson motorcycles. But it did.  The clothing company will be selling clothes for actual grown-ups who once upon a time were the same teens who spent their parents’ hard-earned cash at this very establishment.

 

 

Starbucks: Can’t We All Just Get a Latte; Pinterest Valuation Not So Pint-sized; Irish Airline’s Got a Flight For You

Race to the frappucino…

Image courtesy of amenic181/FreeDigitalPhotos.net

Image courtesy of amenic181/FreeDigitalPhotos.net

Starbucks’ latest campaign called “Race Together” has little, if nothing, to do with coffee. However, CEO Howard Schultz sees it as “…an opportunity to re-examine how we can create a more empathetic and inclusive society — one conversation at a time,” and presumably one $5 drink at a time, too. The idea is to have Starbucks baristas write, not just your name on your cup, but the phrase “Race Together,” in an effort to engage its customers, frequenting its 12,000 locations, in a dialogue on the very sensitive topic of race. The idea took form back in December, when Mr. Schultz held an internal meeting following the shooting deaths of unarmed black men in Ferguson, Staten Island and Oakland, California.  Several forums and thousands of employee statements later, #RaceTogether was born, and on March 20, USA Today will join hands with Starbucks as it offers a supplement to that day’s edition offering various ways to begin dialogue and promote discussions on race. It’s just another day in the life of Starbucks and Howard Schultz, who likes it when his company practices “conscious capitalism” (yes, that is a thing and yes, there are other companies who practice it) which is basically using a company’s invaluable resources for the power of social/societal good as opposed to…dare I say it…profit.

Pin it…

Image courtesy of Mister GC./FreeDigitalPhotos.net

Image courtesy of Mister GC./FreeDigitalPhotos.net

What would the world do without Pinterest? It’s a good thing we’ll never have to know as the social media/online bulletin company just picked up – ridiculously quickly, I might add – some $367 million. That cash is going to help fund some lofty international expansion plans, which makes perfect sense since 2014 saw Pinterest picking up 135% more international users. In fact, some 40% of Pinterest’s accounts come from beyond our cozy borders.  Some of this new funding comes from some veteran Pinterest investors, but newcomers are also joining the online bulletin board fray. It helps that Pinterest started selling ads, though, in the magical land of Pinterest, ads are elegantly referred to as promoted pins. Nothing like a little ad revenue, or rather, promoted pins to fiscally stir things up a bit. Thanks to these latest generous investor contributions, Pinterest’s valuation is now going to be in the $11 billion stratosphere. Although, if you want in, here’s your chance as the company is apparently still looking to raise about $211 million.

Bon Voyage!

Image courtesy of bplanet/FreeDigitalPhotos.net

Image courtesy of bplanet/FreeDigitalPhotos.net

Ireland’s famed budget airline, Ryanair, announced plans that it will begin to offer flights from 12-14 European cities between 12-14 U.S. cities.The company also announced that those flights could be as little as $15. No joke. Of course, that price doesn’t necessarily include an actual seat to sit in during the trans-atlantic flight, but hey, minor details. Indeed, there are many fees which will be quickly added to that attractive little fare, like meals, baggage fees, breathing…So by the time you finish selecting all those “extras,” you’ll likely be shelling out something closer to $275 per ticket. Which isn’t so bad when you consider that full budget airlines charge at least double that amount. And you’ll only have to wait 4-5 years. You see, Ryanair still needs to acquire a fleet of aircraft equipped to those make trans-atlantic flights. But like I said before, minor details.

 

Luck O’ the Apple’s Alleged Transfer Pricing; eBay and PayPal Headed for Splitsville; Confidence Bruiser

An Apple away…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

 

There are some very complicated things going on with Apple on the other side of the Atlantic. Except Apple probably won’t get in too much trouble for any of it. Well, maybe a little. It depends on whom you ask. As for Ireland? Well, the Emerald Isle just might be in a whole vat of hot water. At issue is whether or not Apple did something called transfer pricing, the details of which I will gladly spare you. Though some would argue all the trouble has to do with whether or not Apple was getting illegal tax breaks from Ireland – a very major no-no, in the eyes of the EU anyways. In any case, there is a report coming out from an EU commission and, in keeping with the spirit of all things that involve government, it’s all very convoluted.  If anyone or any entity, for that matter, gets fined, it will likely be Ireland, that very corporate-hospitable country, who some people argue was a little too friendly to Apple and whose allegedly generous tax-breaks amounted to, I kid you not, nothing short of “state aid,” according to the Commission. And if you were wondering how any of this affects you, then rest assured – it doesn’t, really.

Breaking up is not so hard to do…

Image courtesy of sdmania/FreeDigitalPhotos.net

Image courtesy of sdmania/FreeDigitalPhotos.net

What Carl Icahn wants, Carl Icahn gets. Eventually, anyways. For instance, activist investor Carl Icahn wanted eBay and PayPal to march head first into splitsville hoping for a “tax-free” spin-off. And wouldn’t you know it, the two companies did just that. How convenient. It helps that Icahn owns about 30 million shares of eBay and scored about $100 million today from the move. EBay, by the way, pulled in revenues of almost $10 billion this year, while PayPal pulled in $7.2 billion. Before you scoff at PayPal, know that PayPal grew at a 20% rate compared to eBay’s 10% rate. So now who’re you gonna scoff at? Huh? This move frees up PayPal to pursue a whole bunch of opportunities that might have held it back if it was still tied to eBay. Staying together would have proved “less advantageous” for both. Ah! What a break-up story. I wonder which studio is going buy the rights to this corporate tearjerker.

Speaking of self-esteem…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like consumers aka you, me, us aren’t feeling very fiscally confident these days, that is, according to an informative index that actually gauges our collective confidence level. Which, by the way, weighs in at at disconcerting 86. It’s disconcerting in that last month our collective confidence level was over a 93 – a seven year high, mind you. Quite the tumble, I’ll say. So what exactly is shaking our confidence lately? Not so minor things like job growth that hasn’t been growing quite as quickly as we’d like. And if that isn’t enough of a confidence deflater then how about the fact that Americans also don’t much care for the slow-ish economic growth. But some really intelligent economists out there find that this months “86” index reading is but a minor hiccup in an otherwise positive, albeit, slow economic recovery. So fear not, oh faithful consumer, as falling gas prices and job growth (even though slow, at times) are all within reach.