Cupertino Mayor Miffed At Apple

Tesla stock, tax system, Cupertino Mayor

The mayor beliefs that the tech giant is not sharing the profits with the region justly

Barry Chang, the mayor of Cupertino is disgruntled with Silicon Valley tech giant, Apple Inc. In an interview with The Guardian, Chang stormed at the world’s most valuable company and accused it of tax evasion and concealing its money in the accounts maintained overseas. He said that such practices of the tech titan are weakening Cupertino. He taunted the company saying, “Apple is not willing to pay a dime.”

Chang argued that since the company is making exorbitant profits then they should “share our responsibility for our city, but they won’t.” Currently, while being in compliance with the tax system, Apple Inc. pays at a tax rate of about 2.3%, at this rate, from 2012 to 2013, the tech behemoth has paid mere $9.2 million while generating close to $181 million offshore. Mr. Chang cited that the company ought to pay far more and that he tried compelling the tech giant to pay around $100 million to Cupertino for the purpose of infrastructure projects. However, the city council voted against the motion.

Chang added that he is determined and it is less likely that he’d back out. On the other hand, the Cupertino, Calif. firm has stated that it has been paying the Cupertino tens of millions of dollars in the form of property taxes and additional sales; also, while part of the tax charged to the company relates to the construction of the new campus. The campus is likely to generate billions for the local businesses.

In the past as well, Apple Chief Executive, Tim Cook has assured that the company has always maintained law compliance. Currently, the tax system followed in U.S. allows the organizations for such practices –also referred as “double Irish.” Through the initiative, the companies may set up their headquarters at low-tax regions like Ireland and subsequently disperse the profits to subsidiaries in regions like Bermuda or Cayman Islands. According to Citizens for Tax Justice –a non-profit research group, if the tech titan’s financials are adjusted on the basis of the money held by the company overseas then the iPhone maker would, in taxes, owe close to $59.2 billion.

Last December, on similar matter, Mr. Cook expressed that the criticism against Apple has political roots. He cited that the country should work on framing policies which could allow companies to bring in the profits they earned overseas conveniently to their dwelling countries without the payment of exorbitant –30% to 40% –corporate tax rate.

Apple’s stock, at the market which traded on Thursday, closed at a price of $93.24 by falling 0.38%.The 52 week range of the stock is $92 to $133.


Apple Watch Sold Twice As Much As iPhone

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The sale of the smartwatch is critical who is amidst the slowing sales of its core product

In each device’s debut year, the tech giant has sold more Watches than the iPhones. However, the smart-watch hasn’t been able to eliminate the tag of “disappointment” from itself.

On Sunday, just two days before the tech giant’s quarter earnings –the smartwatch marked its first anniversary. The product’s fate is important for the tech titan at it’s the first product since iPad which test the innovative mind of the CEO Tim Cook at the time when the company’s core product is facing slowing sale.

Up till now, the sales figures are quite satisfactory. The Cupertino, Calif. firm didn’t tell the exact figure of the Watch sales but the analysts have estimated that around 12 million smartwatches were sold in the first year. If the estimates are true then the sales generated revenue of $6 billion –at an estimated price of $500 which is three times Fitbit Inc.’s –an activity tracker –annual revenue.

In comparison with the sales of the Watches, in its first year, the tech giant sold close to six million iPhones. According to the researcher IDC, last year, Apple’s Watch made up around 61% of smartwatch sales across the world.

Still, there are few people who dare to call the product, a “flop.” Co-founder of Union Square Ventures –a venture-capital firm, Fred Wilson declared that the device wouldn’t be a “homerun” like its successors –iPad, iPhone, and iPod –expressing that majority of people will pass the idea of wearing a computer on their wrists.

The smartwatch has few drawbacks too. It has underpowered processor due to which the watch’s functionality is slow. It doesn’t have Global Positioning System (GPS) and mobile connections which means that it has always had to be accompanied with iPhone simultaneously restricting its usefulness as an independent device. Furthermore, the battery ought to be charged daily.

But, the Watch still lack definite functions for the Apple Watch. It certain functions are quite well including mobile payments, notification, and activity tracking. However there is no function exclusively for Apple Watch. Every function which the Watch performs is what an iPhone or a less expensive activity tracker could do.

Few of the consumers also noted about the slow software of the device and the diurnal inconvenience of charging the device daily have made them shift to the other cheaper smartwatches.

Sources privy to the matter has said that Apple is working on fixing the apparent flaws of the Watch. The tech giant is actively involved in adding faster processor and cell-network connectivity to its next-gen smartwatch.

An Apple spokeswoman didn’t comment when asked about the apparent issues of the Watch.

J.P. Gownder, an analyst from Forrester Research expressed that the device isn’t useful. He wants the businesses to develop apps like the one created by Starwood Hotel & Resorts Worldwide Inc. which allow the users to receive a room assignment and unlock a door, in addition to checking in, without even dealing at the front desk.

Mr. Gownder said that the Apple Watch doesn’t offer a broader ally of services and added: “Apple needs to make it an indispensable thing.” Nevertheless, Apple has a large number of fans who use the product daily and are quite satisfied with it.

According to a research firm, Wristly, out of 1,150 tech giant’s smartwatch users around 93% has said that they are “satisfied” or “very satisfied” with the product.

Under the umbrella of the loyal customers, the Apple Watch will surely perform better.

Needham: Apple’s Long-term Value is $180 per share

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Apple Inc.’s stock has suffered enough for the past few months, especially due to the latest products that it launched along with the saturated smartphone market.

The clock is ticking for Apple Inc., as the smartphone market has started to saturate, as many skeptics suggest as well. However, it is looking for alternatives to tackle this problem; we know that other avenues that the tech giant is going towards include electric vehicles. An upward trend in the stock of the technology company is expected in the long-term as it aims to explore these potential opportunities.

In a note investors, a bullish stance have been given by one of the financial firms that covers the stock of Apple, Needham and Company. Laura Martin, an analyst at Needham and Company has stated in the investors note that given the iPhone maker’s dominance in the market, it is likely to take up the task of creating a novel digital network with the help of smartphones; she further stated that currently the tech company is in the best position to take up on this task.

As per the survey conducted by Ms. Martin, the findings suggest that the company’s annual churn rate is currently at 12% which means that there is presently less competition and hence more pricing power along with stream revenues. She has given a long term value of $180 per share to the technology organization which indicates a 62% increase from the current levels. She has based her valuation on the following points:

As per her findings, Apple is currently above both social media company leader Facebook Inc. and world class content leader, Disney. She stated that the profit margins of Apple are higher than that of both of these companies in the past five years. She believes that the iPhone maker should not be evaluated as only a hardware company. According to this methodology, she believes that Apple stock is likely to be traded at $200 per share.

Comparing the company with cable companies, the analysts stated that similar to how these cable companies have recurring subscription business models, Apple also has bundles in its hardware that include software, services, content (Siri). However, she analyzed that if we take the company is one of the cable organization; the stock should be valued at $180 per share.

The analysts surveyed over 300 iPhone users, and she found out that on average these users usually stay on apple’s ecosystem for at least eight years. Another thing she found out was that 1.3 IOS devices are used by these customers, which means that 1 billion active devices are being used by over 770 million customers in total, all across the world.

However, the financial services and research firm, Needham and Company has maintained a Strong Buy rating on the stock of the iPhone manufacturer along with a 12-month target price of $150. The stock already has been under a lot pressure after launching its ‘not so appealing’ products recently. In an attempt to attract customers again towards its products, the company launched iPhone SE priced at $399 in emerging markets such as China and India (mainly because it was a low-priced smartphone in comparison to how its products are usually priced).

Presently the stock of the tech giant is being traded in the market for a share price of $109.62.

Apple Inc’s iPhone Sales Dying Down

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The technology giant need to up its game as people are not interested in buying and upgrading their iPhones anymore.

Apple Inc. has released its first quarter of fiscal year 2016 financial report. For the longest time, the iPhone has been the reason why the technology company has always been able to report profits. Presently, according to the earning’s report, even for the latest quarter; profits have been reported due to the iPhone but it can be observed that the love for the flagship device is now dying down amongst the once regulars.

According to the earnings report, the company has managed to beat the last year’s profits of $18 billion as it reports profits of $18.4 billion. However, it managed to underperform the expectations of the analysts at Wall Street as it posts iPhone sales units of 74.8 million while in the same quarter in the previous year it sold over 74.5 million units of the device. In financial terms, this shows a year over year growth of just 1%.

IPhone accounts for as much as two thirds of the company’s revenue but at this point the management of the Silicon Valley giant has admitted that in the future this slow growth is likely to happen. The 1% year over year growth in unit sales is a first ever for the company. The chief executive officer, Tim Cook of the giant blames the slow growth on the ‘strength of the dollar’ and ‘global recession’, according to Bidness Etc. He said during the earnings conference call that the company has been seeing extreme conditions all around; something that they have never witnessed before.

We believe that the this low growth is mainly due to in the slow growth and the economy crisis in China and secondly iPhone users had a different perspective of iPhone 6 and 6S in mind – which was released back in September 2015. He thought that the device will have massive changes in features but unfortunately it seemed to be quite similar to the iPhone 5 and hence was not convincing enough for the users to upgrade their smartphones.

It is against the norms of the company to reveal the iPhone sales estimates of the subsequent quarter but this time Tim Cook did just that on Tuesday. He still believes that there is massive growth potential as there are emerging markets that the tech organization needs to tap. Additionally, to tackle the question on the saturation of the company’s smartphone market; the CEO stated that most of the Chinese consumer who bought the product were first time smartphone buyers. On this he added that because of this reason he believes that there are still a huge number of people who will be the first to buy smartphones and that is the market share the company will work on getting.

Mr. Cook informed on the conference call that most of the huge sales were being generated from the Chinese regions but the future growth of these regions seems a little uncertain. For the upcoming month of March, the smartphone maker is estimating revenue of $50 to $53 billion – these figures show a drop in the revenue in comparison to the same quarter in the previous year. Everyone had hoped that the other products in the Apple product line might be able to revive the declining sales, but unfortunately they failed to do so but the Apple Watch has shown promising results for the quarter.


Apple iPhone China Sales Exceed U.S. Sales Amidst Economic Slowdown

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How will the U.S. biggest high-tech giant stand strong amidst China’s slow economic growth?

Apple emerged in China’s market in 2015. World’s most populated country proved to be the great stop for Apple store. Many customers waited outside the store on the launch of its prestigious iPhone 6. Chinese market represents 25% of the high-tech giant’s global sales. It has generated $58.7 billion – an increase of 84% – revenue for the company in the last fiscal year ended September 2015.

Also, three months around lunar New Year in 2015, the sales of iPhone in the world’s largest smartphone market exceeded the sales in U.S. However, the provocative question is whether the U.S. based company will be able to yield high returns from China amidst China’s slowing economic growth.

The most popular Apple’s product is an iPhone, which is also called “a street phone” describing how it could be spotted in so many hands on a street in large cities. The product often receives criticism over its hefty price. In China, the middle-class community is great and many budget conscious consumers have termed the product “not worth the high money.” For example, for a consumer whose annual income remains around thousand USD, the affordability of the luxurious phone is quite low.

To continue its growth in one of the Asian super powers, this $562 billion company has to carry out strategies that could boost the sales in the middle-class sector as well. Contrary to America, where customers opt for different payment plans to buy an iPhone, Chinese buy a product by paying upfront. Naturally, for such customers, high price of the phone is a deterrent.

Tuesday, January 26, 2016, Apple is scheduled to declare its quarterly earnings. Investors and analysts are intrigued to find out what the organization has to say about its growth in China and what changes it would bring to ensure a boost in sales.

Although, Apple offers a trade-in program at its retail stores where a customer can get credit for used iPhones, the local stores in the market, which deal with the buy and sell of used iPhones, have sprawled strongly. The used products offer better deals for the customers who can purchase it for around $450 or less depending on the model. Apple’s pink – commonly known as rose gold in China – iPhone is the hot favorite of the second-hand market.

Chinese consumers use handsets with utter caution and care. They use them differently for instance, many users preferred “Assistive Touch” feature over home screen button to protect its resale value. Almost all users use screen protector on their new handset to avoid any damage.

The Silicon Valley business has to come up with strategies that can attract the lower-end market of the Asian country. It also needs to rationalize the high pricing of the product to show the worth of each of their penny to the budget conscious consumers.

At the market close on Monday, Apple stock price stood at $99.44.



Apple Inc. and Microsoft Corporation Earnings Battle

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The coming week is set to observe the earnings of U.S.’s top companies

Analysts and investors are all set to witness the “earnings” battle between Apple Inc. and Microsoft Corporation. While, the Californian high tech giant manages being the analysts’ favorite. Tuesday, January 26, 2016, evening will reveal whether the company meets the Street’s expectations or not. Whereas, the world’s popular Tech Company will be joining the bandwagon of reporting the earnings a couple of days later; on January 28, 2016. Let’s take a look on what is expected from the two companies:

Apple Inc.

The U.S. largest and successful high tech company under the leadership of CEO Tim Cook is expected to churn out positive and solid results for its first quarter of fiscal year. Although lately, the company has faltered a bit however its devoted fans still expect good from the company. The organization’s innovative products amaze the consumers to a great extent. Its proposed plans and strategies have always attracted the investors to it.

Analysts hope that when the tech behemoth will put forward its financial results, it will declare an EPS of $3.27. In comparison with the last year’s same period’s EPS of $3.06, the forecasted earning is up by almost 7%. The Californian giant is also expected to report revenue of $77.04 billion for the three-months quarter ended on December. The price target is capped at $142.67. The 52 week range of the company is set from $92 to $134.54.

Microsoft Corporation

The hard work of Bill Gates’ genius mind, Microsoft Corporation is America’s most popular multinational company. Set on the streets of Washington, the multi-billion company, driven by the competitive leadership of CEO Satya Nadella is scheduled to share its quarterly result on coming Thursday. The U.S.’s multinational giant has received pessimist views in relation to its earnings.

The Washington based organization is anticipated to declare revenue of $25.26 billion –an estimate of around 4% lesser than the revenue generated in the previous year. The analysts project company’s fourth and last quarter’s EPS to be $0.71 –same as the EPS announced in the last year. Microsoft stock price target is unanimously set at $58 with a 52 week range of $39.72 to $56.85.

The end of the current week will show which company outperforms the analysts’ expectation and which turns out to be exactly how predicted.

When the Friday market closed, Apple Inc. stock price stood at $101.42 by undergoing an increase of 5.32% while Microsoft Corporation stock price was $52.20 having gone up by 3.59%.


Alphabet, Inc. Acquires Bebop Technologies Inc. For $380 Million

Apple News App Attracts Publishers Amidst Rocky Start In Media Industry

2015 has been one of the best years for Google, Inc.; 2016 has a lot to offer with its autonomous car sector, virtual reality market and YouTube.

Bebop Technologies, Inc., a startup founded by Diane Greene who is a Director and Executive at Alphabet, Inc., was acquired by the largest search engine company for a price of $380 million, as per a securities filing earlier on Monday. According to the agreement of the acquisition, the Internet giant offered to give $380 million in shares on December 17, 2015.

The filing stated that the Diane Greene received stock valued $148 million as part of the deal in this entire acquisition which the recognized Silicon Valley businessperson plans to donate to a “donor advised fund.” This advised fund is a way of giving to charity through which the donor can have tax benefits and keep a check on how much money is donated and where it is going, as stated by the Internal Revenue Service.

Greene has been a part of Alphabet, Inc. for a while now and also been a board member since 2012. Under the Bebop deal, the entrepreneur was named the Senior Vice President of Google’s cloud computing business in November. Currently the cloud computing business has been lagging behind Microsoft Corporation and Inc.’s cloud sectors, as they are the market leaders.  For years she has specialized in the area of selling cloud storage services and tech devices and she is doing the same for Google by selling these products to larger organizations.

A cloud executive, Urs Holzle who works alongside with Ms. Greene has stated that the acquired technology will play a vital role in company’s enterprise IT offerings. At the time when the acquisition was announced Bebop Technologies had 39 employees and 76 investors, according to the filing presented on Monday. Some of the investors that have helped the startup out were Andreessen Horowitz and Sequoia Capital.

On the other hand, 2015 has been a good year for Google’s stock as it appreciated 45%, showed increased revenues as well as earnings. It turned out to be one of the most striking days for the tech giant. The next planned step for the company is penetrating into the virtual reality market with its Android VR along with Google Glass Gen2. Additionally, another segment on which the organization is going to keep its focus on is the monetization of YouTube, which is its best offering. The third attention is going to be given to the autonomous car sector – although these vehicles are not scheduled to be launched it 2016 but analysts predict it as one of the major revenue generators for the future.