Wednesday, August 31, 2016

AAPL: Buy or GoodBYE that is the question


Subtitle:  Dear Internet, should I buy AAPL stocks?



Apple Please Pay
The European Commission has asked Apple to pay 13 Billion Euro's in taxes that it says it should have, by rights paid, but did not.  Why?  Because Ireland, an EC member gave it a special tax deal, and Apple organised its entire European sales to be channeled through Ireland.  Not just dodgy, but sort of double dodgy.


Mostly Outraged
Everybody is upset!   Apple claims it has not broken any laws.  Conspiracy theorists have brought TTIP and the VW Emissions scandal into the equation.

The UK government  (you know the BREXIT people) have stepped in to ask Apple to consider coming to the UK!  But confusingly added they are not talking special deals, but maybe reduced corporation tax for all?

If you have to read one article on the effects read valuewalk:

http://www.valuewalk.com/2016/08/apple-inc-aapl-tax-ruling-good/

and some or all of the following

http://www.bbc.co.uk/news/business-37226101

http://www.tweaktown.com/news/53670/apple-ordered-pay-euro-13bn-back-taxes-ireland/index.html

http://qz.com/770068/the-eu-is-all-but-inviting-the-us-to-claw-back-a-share-of-apples-tax-debt/



The Principled View


My view is that Governments should not offer sweetheart deals to multinational corporations allowing them to avoid tax and that public outrage and Government outrage  (from all the other countries effectively defrauded)  should also counter and prevent such tactics.

These amount to distortions of a free trade system, as an individual every country I know says:  If you earn it in country X you pay tax in country X.  Even if I'm resident in country Y.  Corporations should not be offered or accept sleazy deals.









Essentially Apple's deal with Ireland has 


- enabled them to pay less taxes in Europe
- because of the Sweetheart deal with the Irish government
- made Apple products more competitive than other providers
- effectively short-changed i.e. other Governments because the tax that should have been paid elsewhere was not

- ironically it's not as if this tax advantage was passed to any consumers.  Since Apple products are without exception  (please correct me if  I'm wrong) the most expensive computer products in the marketplace bar none


So Marcus:  Buy or Sell Apple shares?

The Announcement




Wait: there is an additional factor.  The Apple product announcement on Sept 7th 2016, at which at least a new iPhone is predicted for announce.



So Buy, Sell or Hold?

+ Long term it is still a Hold or Buy: Only because AAPL are without doubt doing it better than the competition (I mean business efficiency,  not business ethics, nor technical product competence of course!)

Most financial pundits point to a severe wholesale market [negative] correction, but this is now at least 12 months overdue, and nothing has happened.

So in a generally rising market, your money is safer in AAPL than in other technology stocks. Period

- Short Term: I'd put Stop Loss order at something like 90-95.  If AAPL really starts to tank short term, get out!

- The AAPL tax issue in Ireland will be appealed and take years to resolve.  So I can't see this affecting share pricing in the next 12 months.  It might dent prices short term, but I'd say barely.

- In times past I'd seen AAPL decline post big announcements because [impossible] expectations were not met, but just to prove me wrong, this did not happen last large announce!



- Apple relies today almost totally on its smartphone revenue, I mean the Macbook and other computer business is trivial.  Since the Smartphone market is now pretty Globally saturated, I personally believe the iPhone 7 is unlikely to stem the iPhone slowdown.

- Not just individuals but even Central Banks  (yes Swiss National Bank, I mean you) are now buying AAPL.  So long as this continues even with declining sales,  I still believe AAPL is better placed than any other major tech company in 2016 to hold its share value.