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

Bite me…


Image courtesy of Stuart Miles/

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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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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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.



GM’s Big Lyft-off; Blame it on China; Smoking Gun Stocks

Baby you can drive my car…


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GM’s gone and plunked down a whopping $500 million to get in on some ride-sharing action. The lucky recipient of this half billion dollar prize was none other than Über’s biggest competition: Lyft. Besides this being one GM’s biggest moves ever, this latest development also marks the biggest move by an automaker in the ride-sahring industry. Plus the car company gets a nice comfy seat on the Lyft board. President and co-founder John Zimmer says Lyft plans to use the $500 million to help build brand awareness, lest you find yourself unaware of Lyft and its lofty endeavors. Lyft’s valuation is now priced at a cool $5.5 billion. Nothing to scoff at, yet it still pales in comparison to Über’s mammoth $62.5 billion valuation. Lyft plans on developing a line of self-driving cars, the perfect addition, it would seem, for a ride-hailing/sharing company. The idea is to be able to call upon these driverless vehicles on demand. And apparently, the race to develop self-driving cars is all the rage right now in Silicon Valley.

Drop it like it’s hot…


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It’s all China’s fault that 2016 got off to a rocky start on Wall Street today. Lousy economic data, which included weak demand for Chinese manufacturing, set a downer of a tone for 2016’s very first day of trading.  Shares of companies all over the  world plunged, including here, where the Dow dropped taking the S&P and Nasdaq with it. U.S. listed shares of Chinese companies also took a hit, even investor darling and “It” stock Alibaba Group Holdings Ltd. But it was Chinese markets that dropped a staggering 7% with Shanghai’s Composite Index hitting its lowest levels in three months. Chinese authorities whipped out the country’s “circuit breaker” mechanism, an idea that must have sounded at good some point, but maybe not so much anymore. Basically, if the the CSI300 (a Chinese index) drops or rises 5% during the course of the trading day, then trading stops automatically for fifteen minutes. But after that fifteen minute period, if the CSI300 continues to drop or fall 7%, then trading gets suspended for the whole rest of the day. Some people think this “circuit breaker” deal is overkill and only making China’s fiscal issues worse.  Since June, Chinese authorities have been trying to figure out ways to restore investor confidence in the nation’s stocks. Analysts, however, say part of the big sell today off had more to do with a 6 month lock-up that just ended. Authorities made it so that institutional investors couldn’t sell off certain stocks for the last six months. The idea was to give a “boost” to Chinese indexes. But did it work? Hmmm.


And in other news…


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While plenty of stocks on U.S. indexes took a hit (because of China, as you may recall from a few sentences ago), one industry that actually surged today was guns. Whatever your position on firearms, the fact is that when tragedy strikes and calls for tougher gun laws are sounded, plenty of Americans scramble to get their hands on even more guns. It’s debatable whether the trend is because people feel safer for possessing one or because of the fear that the government attempt to limit constitutional rights. Sure, calls for stricter gun control came crashing down following attacks in Paris and San Bernardino. And sure, Barack Obama has big executive plans to curb some constitutional rights in the near future, but oddly enough, that only sends consumers out to stock up on their firearms supply. According to the  National Instant Criminal Background Check System, there were 38% more background checks this December than December 2014. Want some more numbers? Smith and Wesson Holding Corp. saw particularly strong sales towards the end of the year with its shares getting a nice boost, while Sturm, Ruger & Co. pulled down a 52 week high last week.