> Getting allocations of corporate bond deals is one of the easiest ways for managers to outperform benchmark bond indexes because they’re typically sold at a discount to market rates, according to Jason Shoup, the head of U.S. high-grade credit strategy at Citigroup Inc. The bonds aren’t added to the indexes investors are measured against until the end of each month. That can generate as much as 0.2 percentage point of additional gains for investors who get in early, Shoup said.
If you ever wanted to know about the bond market there are two pieces of gold in the above lines.
1) Getting in on new issues is free money. Stocks are the same. Steve Cohen at SAC was famous for overpaying on commissions just to get the first call for new issues. When bond funds return 1.1% and beat the market having an additional 0.2% really puts you ahead of the competition to the tune of 18% in gains for free.
2) The fact that the gain is 0.2%, not 2% or 20%, 0.2%. Bonds are a volume game. You find an angle to make 0.2% and lever the hell out of it. Having said that, this is the playbook directly from LTCM.
New issues are not always free money. Seen many deals over the past few years get torpedoed by pricing way too tight or complete garbage allocations. Even seeing some recent IG issues widening a decent amount soon after issuance.
"Steve Cohen at SAC was famous for overpaying on commissions "
After a real estate deal last year I bought the broker a gift and delivered it. He said "wow shouldn't I be buying you the gift?". No problem because the next time I was the person he called first when he got a fresh listing on a commercial investment property which I was able to buy at a much lower price per sf than if he had actually taken the effort to shop it around or keep the listing active. People respond amazing predictably even if they think of themselves as highly ethical. They tend to remember the people who treat them well and appreciate their efforts.
In this context a small gift (what I am describing) also isn't necessarily a bribe. It is an "advertisement" that makes the person that you are giving the gift to remember you and to call you when they have "a good deal".
It all depends on the relationship. It is often the case in business that instead of thinking solely about the costs (or commissions) that it definitely pays to be someone's good customer and allow them to make money from you.
Not to be critical of your business practice, but the broker's behavior seems to be on thin ethical ice here, since he had a fiduciary obligation to the client - his intentions may have been ethical but but he comes off as a little lazy/irresponsible for not getting the best price for his client.
As you're obviously investing in real estate yourself, how do you balance the benefits of liquidity from a quick sale vs. those of maximizing the sale price by shopping around? Put another way, if you were the seller in that transaction, is the opportunity cost of waiting a bigger worry than getting the best price? Is it just the seller's responsibility to instruct the broker 'this is my liquidity goal, anything on the top is gravy' or 'take your time selling, I want to get the full value of this asset', depending on the seller's need?
I'm not a business person/investor so I would like to understand your thought process better. Thank you. PS feel free to email.
No real estate broker gets the absolute best possible deal for a client. They get a small percentage of any deal. A slightly better deal might be worth thousands of dollars to the client but only a few hundred to the broker. It's not worth the broker's time to spend a full week looking for the absolute highest buyer. It's in the broker's interest to process more deals more quickly than to squeeze that last little bit out of every property.
I'm not talking about the absolute best possible deal, I'm addressing larrys' observation that he picked up an investment property for significantly less than the broker could have sold it for if he shopped around. Fiduciary duties require brokers to act in the client's interest, not their own. This isn't something a broker can just blow off if a dispute arises, it's a legal obligation. That's why it's referred to as a duty.
"than the broker could have sold it for if he shopped around"
In reality most brokers simply take any calls that come in from commercial MLS types (say loopnet.com) and may call a few people and put in a nominal amount of effort.
Speaking of loopnet a few years ago I put a property on that site. One day I get a call from a broker for his client. I immediately let him know that I will give him 6% commission for the deal. And of course he was very motivated then to convince his client to take the property because if he found him another property it not only is work for him (that was listed by another broker) he would only get 2.5 or 3%. And another owner (if there were any) might give him a hard time about paying commission.
By the way this type of thing isn't learned in Wharton (where I went btw.). It is learned by observing what others do and reverse engineering things that you see that are out there that are happening. And interpreting your own reaction to events to draw conclusions as to why people behave the way that they do.
However I am paid to negotiate and buy things for people (not real estate). I have even had people tell me that they will pay me more if I can get them a better deal. I tell them that they don't have to do that. That I charge a fixed fee. [1] (And the fixed fee varies btw.) The truth is I get them a good deal because (as I mentioned in my other comment) this is a game for me that is fun and that is the reason that I do this. The money that I make is secondary (one reason is it's not my primary source of income).
In one case I already had a buyer and a seller agree to a deal. The buyer (my client) agreed to the price that I had negotiated and was very very happy. However when talking to the seller I sensed weakness. So I exploited that and got them a better deal than they had already agreed to. Just for the fun of it and because I could. Just to hear the pleasure in my client's voice. Was worth a great deal to me. Didn't make 1 penny more.
So my point is although I think in general (and a book that I can't remember the name of talked about this concept with regards to realtors) you are right there are almost certainly realtors who act the same way that I do in other words they do act in the client's best interest because it is a game for them like it is for me. I guess the key is finding that type of realtor.
[1] Some people who do what I do charge a fee based on "how much they save someone over their budget". So the game there is that they try to get you to increase your budget while knowing that they will be able to buy for much less so they are playing you knowing you don't know what they know about the market.
A tough question. So I would ask indirect questions that all revolved around "what do you like about your job?". And listen carefully to the answers.
If the answer sounds like some standard BS such as "well I really like helping people get into the home of their dreams at the lowest price!!!!" or something canned or manufactured "we win when you win!!! I like win win deals" and so on then perhaps that is just someone who is going through the motions and isn't really in to what they are doing.
Just like with computers. There is the guy who is in it strictly to make a buck, but would never tinker or experiment after hours, and the guy who really enjoys programming for the fun of it and was doing it as soon as they could or as soon as they were exposed to it.
Oh wow I could write a book in response to that type of question.
"if you were the seller in that transaction, is the opportunity cost of waiting a bigger worry than getting the best price?"
If I understand what you are asking about the downside risk of not taking an offer on the table? That is always a consideration in any transaction where you are selling whether it be real estate or another asset. And it depends on a multitude of factors.
Well first let me tell you that in any situation like this you are in a sense playing the person that is working for you many times (the broker). They have to be convinced by you not told by you. They have to believe what you are telling them in order to do the job for you. And they are playing you as well. You are an actor playing a role. It is a game. This is the game that I play (I don't play any other game by the way and I have never played a single video game either but I like this game..)
So you have to decide what your position is and them somehow convince them of that so that they act in your best interest. This means being neither to honest or to dishonest.
Each situation is different and it is really hard to generalize. In one case I was negotiating a lease and I told the broker "I will take $x per sf however if you can get me $x * 1.1 per sf you have really done a good job!" (arbitrary figures btw). All the while I knew he would be able to get me the 1.1x and maybe more. (And he did..) I had already figured that out in advance of saying that. So I was playing him so he would feel like "Daddy is happy". (We can call that the "please Daddy" routine). In other cases I might have said "I need $x * 1.2 at the minimum, see what you can do for me".
In another case I find out that a broker had gotten me a good deal by making my offer on a property "as is". I never told him that of course. But that is how he got me such a good deal. Most people would have scolded the realtor and gotten pissed off. I didn't. In fact I was willing to even waive that mistake on his part (if you want to call it that). When I found out, I wrote him an email and made a joke and said "wow funny I didn't know I was buying that "as is"!!! He writes back and says "that is what I needed to get him to accept your lowball offer!" (was about 32% off asking price..). Then he tells me he can take the repairs out of his commission (I didn't even have to ask). Of course I could easily back out of the deal if I wanted. But I was actually willing to even pay for the repairs that I hadn't agreed to. Not because I got such a good deal but because I want him to take risk for me and not feel like I am some little old lady that will take him out to the woodshed if he fucks up. In other words I want him to feel as if in the end he can take chances if he needs to. This works because that way I get an out and he takes the risks. If he had asked me upfront "I will need to make the offer 'as is'" I'd have to agree to that and then I couldn't back out as easily!.
Here is a real life situation re: quick sale vs. wait.
I had a commercial rental property. It was vacant (for about 5 months let's say). One day there is a flood in the complex and another owner calls and wants to know if I can "help him out" (was a Physician). Almost like he thought I would let him use it for free? Anyway I tell him that his insurance company will pay for everything and I will deal with the insurance company. The insurance company tells me that the Dr's unit should be repaired in 4 or 5 months so what will it cost to rent it for the 4 or 5 months? I say "can't do that I need at least a year's rent for the 4 or 5 months" (and why). We go back and forth and in the end I get the insurance company to agree to pay me for a year rent (full ask) for 4 or 5 months. That's full ask rent. But in the end I didn't even rent to them. I was worried about tyin...
Oh wow I could write a book in response to that type of question.
You should! I find this kind of advice incredibly invaluable. My parents were civil servants so this sort of risk calculus is quite alien to me, and in the first few years of my working life, using my initiative to get something done frequently resulted in disciplinary action - perhaps by chance with the jobs I was in, perhaps the UK/Irish business/employment culture, but seniority and adherence to procedure were prized.
It's very educational to hear detailed first-hand perspectives on entrpreneurial dealmaking from a perspective like yours. Thanks very much.
A very well know VC asked me to write a blog post a few years ago on the subject. I compiled 7 pages of notes. And could have done on forever. These were just bullet points.
I then started to strategize that I would negotiate with the VC who made the request saying that I needed to be able to do 3 blog posts over time not just one. Then maybe I would ask for another two. You know, to get maximum exposure.
Then I realized that there would simply be to many forks to consider and that there are simply to many "what if's" and dependencies. And maybe people would actually be dangerous with a little knowledge. And then I might even deprecate my own advantage since people always underestimate me it is part of the routine in a way.
I make decisions based on what I see at a particular point in time and that is always changing. So to try and give all of the possibilities and things that I think about is really really hard. And my reactions are immediate I don't even really have to think that much to come up with them.
I am sure there are other analogies and it's the same reason that you can't just read a book on playing cards (I don't play cards so I may be off on this one). It's a touch and feel and experience thing that guides what I do.
Years ago I was on the phone with someone and raised a price by 50% just when I heard the particular tone in the voice in the first 2 seconds. How can you do that if you don't know what it is I am hearing that made me do that? And what if there are 500 signals that I am interpreting at the same time?
Not that I couldn't say valuable things of course or that it wouldn't be fun!
By the way I can always tell when someone has read a book on negotiation or tries to come across as a "negotiator". And that is even though I've never touched a book myself on the subject (I don't want to mess with my thinking). I can just spot it by speech pattern or the things that they suggest or the way that they operate.
My dad was in small business. I picked this type of thing up when I was old enough to understand what he was saying. He used to play guessing games of "why did I do this" that could last hours until I had thought of the reasons why he did what he did. I had to come up with all of the reasons why he did something.
Importantly as a small business person he only had to answer to his customers and I guess employees. Plus he could gauge the risk in the chances that he would take and make decisions on the fly w/o being second guessed by anyone or told that he was wrong.
That freedom is really really important because if you don't have that it will restrict the creative juices quite a bit.
> In this context a small gift (what I am describing) also isn't necessarily a bribe.
It absolutely is, exactly because it has an effect. Another post here says that 'the broker's behavior seems to be on thin ethical ice here' -- no, there's no ice whatsoever. This behaviour is outside of the ethical (and regulatory!) standards.
Gifts of nominal value are allowed--to give and to accept them--in the ethical system of every Western business of which I am aware. Saying "thank you" and making small talk also have an effect... adding a token of trivial value to the equation isn't a poison pill.
Bonds, billions, taxes, loopholes, Ireland, Dr Dre and BEATS, blah blah blah.
Let's put this all into perspective shall we?
Apple is drowning in cash yet takes a 30% cut from developers and charges developers $99 to join the iOS developer program. You also have to pay $99 to join the Mac developer program, even if you don't want to sell in the Mac App Store, because you need to codesign your application with an Apple certificate so that GateKeeper doesn't scare users away from your software.
Yes, Apple, business, shareholders, not a charity, blah blah blah. So what happened to "THINK DIFFERENT"?
> Bonds are a volume game. You find an angle to make 0.2% and lever the hell out of it.
This would only work if they are able to borrow money cheaper than the bond markets on which they are buying debt, which would put them in the business of debt arbitrage.
I don’t think this is the case, they are just parking their money in something better than a bank account.
When people talk about a company having "cash" they don't mean a stack of $100 bills, it just refers to any low-risk and liquid asset. US Treasury notes are by far the most common. As to where they keep that paper, there's far less of it and it probably goes in a vault somewhere. I remember that being an issue post-Sandy that banks vaults where they kept a lot of bonds were flooded.
Yeah, different term for the same thing. The technical term is government bond (as opposed to corporate), but most people call the US bonds Treasury notes or T-notes for short.
> Apple, Oracle, Google Inc. and seven of their biggest peers now have in excess of $500 billion of cash and marketable securities, up more than three-fold since 2008, according to data compiled by Bloomberg. The problem is much of it is stuck overseas.
Stuck overseas in the sense that these corporations aren't willing to pay American taxes [1], insisting on using complex tax loopholes that essentially leave the bill on the doorsteps of normal, hard working American citizens.
Apple appears to be terrible at deploying capital. Most of it is just sitting around in cash. It's actually hard to imagine a worse allocator of capital.
I was thinking today that Apple could plow that money into Solar City's SolarBonds [1]. Short maturity dates are available, so they'd be getting their capital back quickly, its a safe investment, and it both helps their image and the environment.
This way they can attack big projects and commit suppliers to building out new factories, granting exclusivity on contracts, etc., as opposed to someone who's very efficient at deploying, but then has trouble getting liquidity when times get rough.
I sometimes wonder if Apple knows more about investing than they let on? They obviously care about money. Why would they let billions sit around in cash? I won't even speculate, but here's a graph of their horde of cash and when we gave it to them. Yes, I said we(the world of course). (Don't want to offend anyone concerning Apple.)
Errr because they're headquartered in the US and rely on the shield of the US government when it comes to rule of law, educating their workforce, providing the infrastructure etc for them to be in the position where they are today? In this day and age it makes _less_ sense to try and tax based on where componentry or network services or consumers start or finish.
Only an American could have written this answer. All other countries in the world use a non global taxation system.
Two basic scenarios:
1. US entity owns a company in the UK. UK company earns $100, pays 20% tax on that, and is left with $80. Declares a dividend to the US parent, and the US then taxes the difference (35% US tax rate - 20% UK tax rate = another 15% to pay). We're left with $65
2. UK entity owns a company in Sweden. Swedish company earns $100, pays 22% tax on that, and is left with $78. Declares a dividend to the UK parent, which is then left untaxed.
Why does 2 make more sense than 1? Because the money was generated in Sweden, and the fact that some parent/holding entity is UK based does not matter (like, at all).
Scenario 1 pushes US companies to expand abroad (i.e. through foreign M&A), and not repatriate any profits back to the US. It also makes it easier for non US entities to acquire US companies, because they can achieve larger tax synergies than a domestic US acquirer would.
A US company trying to achieve something like that would have to do an inversion, which sometimes can be hard to do.
The current state of the US tax code is a great example why Microsoft paid a whopping $2bn for something like Minecraft (Sweden based), or an even larger amount for Luxembourg based Skype. What can they do with that cash otherwise? It's not like they're going to repatriate (ever) without a tax holiday.
You know, I think maybe this taxation system is a part of why US companies become so successful. It basically forces any US company that sells overseas to become a multinational.
It looks like the real issue is the high corporate tax rate in the US then. Are there not double-taxation treaties to avoid overtaxing otherwise?
On the other hand, the scenario of a UK company owning a company in a tax-free zone in dubai and thus paying 0% taxes anywhere doesn't sound fair either.
Double tax treaties are pretty common, it depends on the good and the corridor so I don't really know what it's like for Apple. Still, the fact they mention tax as a reason to keep cash offshore probably means the treaties are non-existent or limited at best.
Well, the second part of this equation is that they are able to funnel a ton of cash to low tax companies (via loans/royalties/other loopholes). So maybe they've only paid 1-5% on the entire amount.
Repatriation of those funds would essentially mean paying close to 35% tax (+ state taxes). DTTs don't fix that, they just make sure you don't pay the same amount twice. I.e. the 20% in the UK AND 35% in the US.
Add to that fact that Apple can pretty much borrow unlimited funds in the market (debt != income, you don't pay tax when you borrow) to fund share buybacks and dividends. Why repatriate? Financially it just does not make sense, since you'd lose so much of your equity. It's better to invest it abroad.
Re Dubai: If an entity is a conduit company, then maybe not. But if you're operating a business or selling stuff there, then I think it is. No income tax is more of an anomaly these days, and a way for countries to attract new business.
You're sort of falling victim to the rules of the current game (US entity owning subsidiary in xyz location) I was working at a higher level and rejecting the notion that a company no longer needs to pay taxes on profits simply because they're outside their borders. The Chinese government can tax worker salaries and levy a consumption tax on goods and services sold into the production. The German government can levy a GST too. And Apple, where applicable, can deduct those taxes before calculating profits. So conceptually that's the cleanest way it should work (same for a German or Australian company. No U S A U S A thing going on here)
* Apple, Google, Microsoft et al. have many foreign workers (green card, H-2B, or maybe L1 visa) and it is easier for american citizens to move/work outside of US than foreigners to get work visa in US. So the question is, if a country (like Spain or Greece) promises tax advantage for next 25 years and makes easier to get visa for employees, would these companies move their hq there?
* If, say, European Union provides better shield, would Apple move its HQ to Germany or Spain?
* Infrastructure: I can say most European counties have better infrastructure than US and it looks like most us companies build their own if needed. With $500 billion on hand, what would prevent these companies to build a better infrastructure in a host country.
Good point. But I would like to know other side of the story too, not just from the CEO.
Although, while I'm not an expert on France's labor laws, I agree laws in most EU countries are on the side of employees. But that doesn't mean when you hired someone, he/she will be working at the company for rest of his/her life without doing some work. Maybe someone who's expert on labor laws can clarify.
Edit: Also different countries in the EU has different laws. It might be difficult to `get rid of bad employee` but it might be easier in Spain...
> Although, while I'm not an expert on France's labor laws, I agree laws in most EU countries are on the side of employees. But that doesn't mean when you hired someone, he/she will be working at the company for rest of his/her life without doing some work. Maybe someone who's expert on labor laws can clarify.
As someone who lives and works in the EU, none of the conditions seems to be particularly unreasonable. If you're talking about someone who isn't working, presumably you'd be firing them for cause. Which you can do: you need to follow a process and document that you're following it, you need to give them explicit warning that their performance is not up to par and give them the opportunity to fix it, and you need to do all of this within a reasonable timeframe.
The Mandriva guy was explicitly not doing that; if you're making people redundant then you're declaring that there was no problem with them specifically, the company just needs to eliminate those positions. If you then rehire people for those positions within the next few months, the courts tend to take a rather dim view of that.
What infrastructure is needed to sell a product manufactured in China to a customer in the US?
Which educated workforce is needed to ship and then sell said product in Germany?
What do American 'rules of law' have to do when the product is sold in Germany (under EU consumer laws)?
If a country or region implemented tariffs that discriminated against Apple products to grow or protect a mobile industry which government do you think they're going to call? And the US government won't say "sounds like a Chinese manufactured product being sold into a Latin American country. Ask someone else to help" Nope, it'll be the threat of retaliatory measures that'll get that market reopened/fixed and it'll be a costly endeavour.
The iPhone is extremely high tariffed in for example Argentina because it is not manufactured in the country. I haven't seen any US government putting pressure on the Argentinian government to change that so that the iPhone can be sold more competitively.
The USA is _VERY_ unique in the world this way. Every other citizen of the world has the freedom to move away and stop paying taxes to their home country if they make no income from it.
That hardly is an excuse for US corporations to avoid tax obligations. Rather it shows the two standards of treatment of the US towards real people and corporation "people".
Think of multinational corporations as multinational families, each one with their own singular citizenship. It makes no sense to tax the family members of other countries until they send money to the family member in your country.
If the other family members decided it was a bad idea to send you money to your country because it will be taxed to death, can you blame them?
>Think of multinational corporations as multinational families, each one with their own singular citizenship.
Why should I? Of course this is not actually what they are, or at least what they claim to be. That is, since money is fungible in a global economy they can in effect use untaxed funds to influence U.S. political campaigns while they claim they are a single person deserving of the same rights afforded by the constitution.
U.S. persons cannot do that. This is what I mean by the double standard.
Right, but of course being as many of the companies in question here were founded in the U.S. and made use of U.S. infrastructure to build their business, and are headquartered in the U.S., and rely on the U.S. labor force for a large part of their enterprise, it isn't accurate to call them non-american.
Which is globally considered completely ridiculous and only the US does it. The moment you move abroad and live there, and perform work there, you ought to be taxed there. After all, you live there. You enjoy the streets, the parks, the police, the infrastructure etc etc, paid for by taxes, to which you ought to contribute.
But what Apple does is enjoy all of that in the US to which it contributes sub-standard taxes, manufactures in China, sells in Germany, but pays Ireland a large portion of its taxes, which in Ireland are diminished to a small amount. That's quite silly.
Sure if Apple created an EU HQ and did a large amount of design, manufacturing, sales, engineering etc, then it's fine if pays taxes there. But it does all its engineering and design (the bulk of the company) in the US, but pays little taxes there.
Besides the fact that they're a US company, enjoying access to the world's deepest capital markets and most sophisticated and responsive legal system (the US legal system works incredibly well from a corporate perspective), you're implying that they're paying the same rate of tax as their domestic competitors in Germany and China/ I'm not sure this is the case, and in any case such local taxes would be deductible from US obligations under tax treaties, as far as I am aware (not a tax lawyer or accountant, consult a professional before setting up a megacorporation of your own).
They pay taxes over there alright (e.g. VAT), which is fine, nobody complains. The issue is they don't pay corporate tax on it in the US, despite the fact Apple is US based and does virtually all of its work in the US, and then commissions factories it doesn't own in China to produce its parts. The end result is that it pays much fewer taxes than citizens do, or companies that don't have a dedicated fiscal team (mostly SMEs which comprise the bulk of American firms, e.g. 90% of firms have less than 20 employees, and 99.9% have less than 500).
Now it's one thing to say it's justified because Apple would have to go out of business and lay off thousands of of their 100k employees. But we can all take a look at that financial situation and make our own moral judgement on whether they should have effective tax rates much lower than a regular business.
thought experiment: What if Apple spun out Apple Design as a US company and paid it contract rates to invent, much like it outsources factories to Chinese companies? then how are the holding-companies profits taxes?
And the corporations only hold out for a repatriation holiday because there has been one in the past, and there is a decent chance of there being one in the near future. This is a slippery legislative cliff - once you indicate a willingness to have the holiday, there is no point in not just dropping the tax rate permanently since no one will bring their billions in otherwise.
I wonder what would happen if we passed an un-repealable law (if such a thing existed) that prohibited tax holidays for the next thirty years?
Hence my parenthetical. But since you mentioned amendments, you should look into the Corwin Amendment [1], which was written to preclude its own repeal. The amendment was an all-in attempt to appease the slave states and prevent the Civil War, but was too little and too late. The purpose may be distasteful to the modern reader, and may not have held up in court ('Can Jesus microwave a burrito so hot that he cannot eat it?'), but it's there.
I'm no lawyer, but I don't see how the text of the amendment would preclude its own repeal. Repealing the amendment in and of itself wouldn't have any effect at all on slavery.
The only argument I can see would be that repealing the amendment would implicitly grant power to abolish slavery, but that seems like thin ice to me.
You could change the world with $500 billion if you spent it effectively. Unfortunately, Google is the only company doing moonshot projects. I hope Apple adds a few more products to their lineup.
I would say that the bill is being left by congress by spending a ludicrous sum of money, not by corporations acting rationally (and taking advantage of/keeping countries competitive with one another).
On the other side of things, Apple has issued about $39 billion of its own bonds over the last couple years. A lot of it is longer term (30 years), but for the comparable bonds with 1-3 year maturities, they're only paying about 1.0% or a little under. It's not a huge difference vs the 1.06% + 0.2% quoted in the article, but they are making some money just by the fact that they have great credit and can borrow at a slightly better rate than they can receive on these comparable bonds.
I honestly don't understand how this is news. Companies have been doing this for ages; MSFT's operations are bests in class, returning over 2% on their cash equivalents while being under tight restrictions for risk tolerances.
It boggles my mind that Apple isn't using all these money for something better. What prevents them from, say, hiring up or luring away all the great CS/hardware PhDs, build a giant lab for robotics, build new space exploration company, new sustainable for-profit tech company, start massive search engine efforts, start giant initiative for for-profit cancer research and so on and on and on.
There are endless challenges to work on and we have tons of great people who would wholeheartedly work on these if they were paid well. The only barrier is capital and leadership ambitions. Apple can really put the world 50 years ahead in tech if they chose to invest the money in these areas.
>It boggles my mind that Apple isn't using all these money for something better. What prevents them from, say, hiring up or luring away all the great CS/hardware PhDs, build a giant lab for robotics, build new space exploration company, new sustainable for-profit tech company, start massive search engine efforts, start giant initiative for for-profit cancer research and so on and on and on.
That they know that money isn't everything when it comes to engineering, and just "getting the best" and "throwing tons of money" at a problem doesn't necessarily result in a good outcome? Especially if it's something outside their core expertise.
Apple, for example, consistently failed with their social attemps (Ping?), and their online apps (mail, docs, etc) which are also-run. Microsoft poured a lot of money into Bing, and it's still something nobody would use willingly (except a couple outliers who would respond to this comment as if nobody means "no one at all" in casual conversation).
Or let's take another company who is "all over the place". For all of Google's efforts in PR-driven research, what has it given us that was a success? The Glass was a huge failure, their attempt at social (Google+) too, GAE is an also-run, Dart got top talent but never got anywhere, and same with several other attempts that linger on or have closed down. Judging from their revenue report, it's all about ads still. (Sure, there's the self-driving car, that might be marketable someday, but for that Apple is said to have a team working on it too)
They also know that the company made all these money by having focus.
Finding a new area to explore is OK. Being all over the place is a recipe for failure. And Apple they ain't gonna do it just because it's a geek's dream e.g. ("space exploration company").
Google did well being all over the place as well... Youtube, maps, gmail, android, chrome.
If they'd just stuck to search, where would they be now? And for that matter, where would we be now?
Youtube and Maps were acquired, not Google projects. So they got something that worked already, instead of just throwing money to come up with something (which seldom worked for them outside of Search and Mail).
Android was Google's (though that was acquired too IIRC, albeit in a much different form), but while a market favorite, it's not a profit source for Google and it's also losing control of it (with Samsung, Amazon etc spinning their own versions). Even for mobile ads, most of Google's revenue comes from iOS devices.
>If they'd just stuck to search, where would they be now?
Sure, but even in this case, as I wrote: "Even for mobile ads, most of Google's revenue comes from iOS devices.".
To have to write a whole OS, buy Moto for multi-billion dollars, get the most market share of the market even, and then lose money on it and still get your ad money most of your competitor's mobile OS you don't control, is a little failure-ish...
YouTube never made a dime before they bought them, was supposedly in a heap of trouble from all the media companies. It's now a profit center.
Maps was a offline C++ project when they bought it... I think it's a bit of a stretch to say it was just acquired.
I doubt they'd be at the same place actually, since they are better at search now because they know more about you. Their results have improved remarkably since 2005, and I don't think that would be the case if they just stagnated.
With Chrome and Youtube, they also are a heavy influencer on web standards, and have done an amazing job at making those more open.
The reason is Wall street. If Tim Cook invests heavily in R&D, earnings will tank and then activist investors will replace him to boost dividends and buy backs.
Google can get away with this as the CEO has a lot of credibility and also class B voting shares.
That's entirely it. IBM is in a similar situation now, where the CEO knows she has to spend some of their massive savings to survive, but is getting major pressure from Wall Street to cut costs and up dividends and stock price.
Not sure why you were downvoted for this observation.
I dont think you can blame Wall Street for IBM's performance. Buffett is a big investor in IBM, if the CEO wants she can use Buffett's influence to keep wall street at bay.
"It boggles my mind that Apple isn't using all these money for something better. What prevents them from, say, hiring up or luring away all the great CS/hardware PhDs, build a giant lab for robotics, build new space exploration company, new sustainable for-profit tech company, start massive search engine efforts, start giant initiative for for-profit cancer research and so on and on and on."
And what do you think Apple is exactly doing?
My company have worked for them in the industrial side and let me tell you this strait: Apple could afford what nobody does, and they do.
You have never wondered why Apple is the one along three manufacturers(Samsung and Microsoft) that could create aluminum computers and not cheap plastic ones?.
The answer is billions invested in manufacturing plants. Apple always gets the best electronic components first because of being, for example, the biggest user of lithium batteries in the world(and the electronics that control it). They have a tremendous negotiation power and routinely screws one or two turns over manufacturers because they can.
Apple designs their own hardware at chip level, they are working on cars, like Google.
They park their money in debt instruments while doing the above like any other company does for getting liquidity.
"Apple can really put the world 50 years ahead in tech if they chose to invest the money in these areas."
I don't believe you understand the meaning of diminishing returns.
If you have more sex with a woman you don't have kids faster than 9 months.
When Microsoft competed against mosaic browser, Mosaic had like 20 employees or so, Netscape like 100, and Microsoft used like 2000. Microsoft browser did not get 20 times faster than Netscape.
>You have never wondered why Apple is the one along three manufacturers(Samsung and Microsoft) that could create aluminum computers and not cheap plastic ones?
So aluminum cases for computers is putting us 50 years ahead? Is it some kind of great innovation?
>cash managers are also based in the city known for its casinos, where hotel rooms costing as little as $69 a night provide cheaper lodgings than banker stops in New York, Boston and Newport Beach, California,
LOL.
As if a cheaper hotel room is relevant when discussing transactions in dozen of milions !!!
112 comments
[ 4.5 ms ] story [ 179 ms ] threadIf you ever wanted to know about the bond market there are two pieces of gold in the above lines.
1) Getting in on new issues is free money. Stocks are the same. Steve Cohen at SAC was famous for overpaying on commissions just to get the first call for new issues. When bond funds return 1.1% and beat the market having an additional 0.2% really puts you ahead of the competition to the tune of 18% in gains for free.
2) The fact that the gain is 0.2%, not 2% or 20%, 0.2%. Bonds are a volume game. You find an angle to make 0.2% and lever the hell out of it. Having said that, this is the playbook directly from LTCM.
After a real estate deal last year I bought the broker a gift and delivered it. He said "wow shouldn't I be buying you the gift?". No problem because the next time I was the person he called first when he got a fresh listing on a commercial investment property which I was able to buy at a much lower price per sf than if he had actually taken the effort to shop it around or keep the listing active. People respond amazing predictably even if they think of themselves as highly ethical. They tend to remember the people who treat them well and appreciate their efforts.
In this context a small gift (what I am describing) also isn't necessarily a bribe. It is an "advertisement" that makes the person that you are giving the gift to remember you and to call you when they have "a good deal".
It all depends on the relationship. It is often the case in business that instead of thinking solely about the costs (or commissions) that it definitely pays to be someone's good customer and allow them to make money from you.
As you're obviously investing in real estate yourself, how do you balance the benefits of liquidity from a quick sale vs. those of maximizing the sale price by shopping around? Put another way, if you were the seller in that transaction, is the opportunity cost of waiting a bigger worry than getting the best price? Is it just the seller's responsibility to instruct the broker 'this is my liquidity goal, anything on the top is gravy' or 'take your time selling, I want to get the full value of this asset', depending on the seller's need?
I'm not a business person/investor so I would like to understand your thought process better. Thank you. PS feel free to email.
That's just the way it is.
http://www.realtor.org/sites/default/files/handouts-and-broc...
In reality most brokers simply take any calls that come in from commercial MLS types (say loopnet.com) and may call a few people and put in a nominal amount of effort.
Speaking of loopnet a few years ago I put a property on that site. One day I get a call from a broker for his client. I immediately let him know that I will give him 6% commission for the deal. And of course he was very motivated then to convince his client to take the property because if he found him another property it not only is work for him (that was listed by another broker) he would only get 2.5 or 3%. And another owner (if there were any) might give him a hard time about paying commission.
By the way this type of thing isn't learned in Wharton (where I went btw.). It is learned by observing what others do and reverse engineering things that you see that are out there that are happening. And interpreting your own reaction to events to draw conclusions as to why people behave the way that they do.
However I am paid to negotiate and buy things for people (not real estate). I have even had people tell me that they will pay me more if I can get them a better deal. I tell them that they don't have to do that. That I charge a fixed fee. [1] (And the fixed fee varies btw.) The truth is I get them a good deal because (as I mentioned in my other comment) this is a game for me that is fun and that is the reason that I do this. The money that I make is secondary (one reason is it's not my primary source of income).
In one case I already had a buyer and a seller agree to a deal. The buyer (my client) agreed to the price that I had negotiated and was very very happy. However when talking to the seller I sensed weakness. So I exploited that and got them a better deal than they had already agreed to. Just for the fun of it and because I could. Just to hear the pleasure in my client's voice. Was worth a great deal to me. Didn't make 1 penny more.
So my point is although I think in general (and a book that I can't remember the name of talked about this concept with regards to realtors) you are right there are almost certainly realtors who act the same way that I do in other words they do act in the client's best interest because it is a game for them like it is for me. I guess the key is finding that type of realtor.
[1] Some people who do what I do charge a fee based on "how much they save someone over their budget". So the game there is that they try to get you to increase your budget while knowing that they will be able to buy for much less so they are playing you knowing you don't know what they know about the market.
If the answer sounds like some standard BS such as "well I really like helping people get into the home of their dreams at the lowest price!!!!" or something canned or manufactured "we win when you win!!! I like win win deals" and so on then perhaps that is just someone who is going through the motions and isn't really in to what they are doing.
Just like with computers. There is the guy who is in it strictly to make a buck, but would never tinker or experiment after hours, and the guy who really enjoys programming for the fun of it and was doing it as soon as they could or as soon as they were exposed to it.
"if you were the seller in that transaction, is the opportunity cost of waiting a bigger worry than getting the best price?"
If I understand what you are asking about the downside risk of not taking an offer on the table? That is always a consideration in any transaction where you are selling whether it be real estate or another asset. And it depends on a multitude of factors.
Well first let me tell you that in any situation like this you are in a sense playing the person that is working for you many times (the broker). They have to be convinced by you not told by you. They have to believe what you are telling them in order to do the job for you. And they are playing you as well. You are an actor playing a role. It is a game. This is the game that I play (I don't play any other game by the way and I have never played a single video game either but I like this game..)
So you have to decide what your position is and them somehow convince them of that so that they act in your best interest. This means being neither to honest or to dishonest.
Each situation is different and it is really hard to generalize. In one case I was negotiating a lease and I told the broker "I will take $x per sf however if you can get me $x * 1.1 per sf you have really done a good job!" (arbitrary figures btw). All the while I knew he would be able to get me the 1.1x and maybe more. (And he did..) I had already figured that out in advance of saying that. So I was playing him so he would feel like "Daddy is happy". (We can call that the "please Daddy" routine). In other cases I might have said "I need $x * 1.2 at the minimum, see what you can do for me".
In another case I find out that a broker had gotten me a good deal by making my offer on a property "as is". I never told him that of course. But that is how he got me such a good deal. Most people would have scolded the realtor and gotten pissed off. I didn't. In fact I was willing to even waive that mistake on his part (if you want to call it that). When I found out, I wrote him an email and made a joke and said "wow funny I didn't know I was buying that "as is"!!! He writes back and says "that is what I needed to get him to accept your lowball offer!" (was about 32% off asking price..). Then he tells me he can take the repairs out of his commission (I didn't even have to ask). Of course I could easily back out of the deal if I wanted. But I was actually willing to even pay for the repairs that I hadn't agreed to. Not because I got such a good deal but because I want him to take risk for me and not feel like I am some little old lady that will take him out to the woodshed if he fucks up. In other words I want him to feel as if in the end he can take chances if he needs to. This works because that way I get an out and he takes the risks. If he had asked me upfront "I will need to make the offer 'as is'" I'd have to agree to that and then I couldn't back out as easily!.
Here is a real life situation re: quick sale vs. wait.
I had a commercial rental property. It was vacant (for about 5 months let's say). One day there is a flood in the complex and another owner calls and wants to know if I can "help him out" (was a Physician). Almost like he thought I would let him use it for free? Anyway I tell him that his insurance company will pay for everything and I will deal with the insurance company. The insurance company tells me that the Dr's unit should be repaired in 4 or 5 months so what will it cost to rent it for the 4 or 5 months? I say "can't do that I need at least a year's rent for the 4 or 5 months" (and why). We go back and forth and in the end I get the insurance company to agree to pay me for a year rent (full ask) for 4 or 5 months. That's full ask rent. But in the end I didn't even rent to them. I was worried about tyin...
You should! I find this kind of advice incredibly invaluable. My parents were civil servants so this sort of risk calculus is quite alien to me, and in the first few years of my working life, using my initiative to get something done frequently resulted in disciplinary action - perhaps by chance with the jobs I was in, perhaps the UK/Irish business/employment culture, but seniority and adherence to procedure were prized.
It's very educational to hear detailed first-hand perspectives on entrpreneurial dealmaking from a perspective like yours. Thanks very much.
I then started to strategize that I would negotiate with the VC who made the request saying that I needed to be able to do 3 blog posts over time not just one. Then maybe I would ask for another two. You know, to get maximum exposure.
Then I realized that there would simply be to many forks to consider and that there are simply to many "what if's" and dependencies. And maybe people would actually be dangerous with a little knowledge. And then I might even deprecate my own advantage since people always underestimate me it is part of the routine in a way.
I make decisions based on what I see at a particular point in time and that is always changing. So to try and give all of the possibilities and things that I think about is really really hard. And my reactions are immediate I don't even really have to think that much to come up with them.
I am sure there are other analogies and it's the same reason that you can't just read a book on playing cards (I don't play cards so I may be off on this one). It's a touch and feel and experience thing that guides what I do.
Years ago I was on the phone with someone and raised a price by 50% just when I heard the particular tone in the voice in the first 2 seconds. How can you do that if you don't know what it is I am hearing that made me do that? And what if there are 500 signals that I am interpreting at the same time?
Not that I couldn't say valuable things of course or that it wouldn't be fun!
By the way I can always tell when someone has read a book on negotiation or tries to come across as a "negotiator". And that is even though I've never touched a book myself on the subject (I don't want to mess with my thinking). I can just spot it by speech pattern or the things that they suggest or the way that they operate.
My dad was in small business. I picked this type of thing up when I was old enough to understand what he was saying. He used to play guessing games of "why did I do this" that could last hours until I had thought of the reasons why he did what he did. I had to come up with all of the reasons why he did something.
Importantly as a small business person he only had to answer to his customers and I guess employees. Plus he could gauge the risk in the chances that he would take and make decisions on the fly w/o being second guessed by anyone or told that he was wrong.
That freedom is really really important because if you don't have that it will restrict the creative juices quite a bit.
[1] http://www.amazon.com/Thank-You-Economy-Gary-Vaynerchuk/dp/0... (non-affiliate link)
It absolutely is, exactly because it has an effect. Another post here says that 'the broker's behavior seems to be on thin ethical ice here' -- no, there's no ice whatsoever. This behaviour is outside of the ethical (and regulatory!) standards.
"After a real estate deal last year I bought the broker a gift and delivered it."
So importantly this was "after" not before.
And it was "a small gift". Not a large gift. (Don't recall exactly perhaps < $50?)
Not a large enough gift to do anything other than say "I appreciate what you have done for me".
Let's put this all into perspective shall we?
Apple is drowning in cash yet takes a 30% cut from developers and charges developers $99 to join the iOS developer program. You also have to pay $99 to join the Mac developer program, even if you don't want to sell in the Mac App Store, because you need to codesign your application with an Apple certificate so that GateKeeper doesn't scare users away from your software.
Yes, Apple, business, shareholders, not a charity, blah blah blah. So what happened to "THINK DIFFERENT"?
This would only work if they are able to borrow money cheaper than the bond markets on which they are buying debt, which would put them in the business of debt arbitrage.
I don’t think this is the case, they are just parking their money in something better than a bank account.
* "Bills" are any Treasury that is shorter than 1 year.
* "Notes" are 2-years, 3-years, 5-years, and 10-years.
* "Bonds" are any Treasury that is longer than 10 years.
They are all "bonds". But the vocabulary is a bit more precise than "short-term" vs "long term".
Stuck overseas in the sense that these corporations aren't willing to pay American taxes [1], insisting on using complex tax loopholes that essentially leave the bill on the doorsteps of normal, hard working American citizens.
[1] http://dealbook.nytimes.com/2013/10/08/to-cut-corporate-taxe...
Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)
IMO, it is non-obvious that they are obligated to do so.
It makes even less sense.
I'm not going to put down your imagination but it didn't take me long to think of a worse use.
https://solarbonds.solarcity.com/
Anything that returns more money than treasury bills at the same maturity date is de facto not "safe."
http://www.engadget.com/2014/05/22/charting-apples-growing-s...
Two basic scenarios:
1. US entity owns a company in the UK. UK company earns $100, pays 20% tax on that, and is left with $80. Declares a dividend to the US parent, and the US then taxes the difference (35% US tax rate - 20% UK tax rate = another 15% to pay). We're left with $65
2. UK entity owns a company in Sweden. Swedish company earns $100, pays 22% tax on that, and is left with $78. Declares a dividend to the UK parent, which is then left untaxed.
Why does 2 make more sense than 1? Because the money was generated in Sweden, and the fact that some parent/holding entity is UK based does not matter (like, at all).
Scenario 1 pushes US companies to expand abroad (i.e. through foreign M&A), and not repatriate any profits back to the US. It also makes it easier for non US entities to acquire US companies, because they can achieve larger tax synergies than a domestic US acquirer would.
A US company trying to achieve something like that would have to do an inversion, which sometimes can be hard to do.
The current state of the US tax code is a great example why Microsoft paid a whopping $2bn for something like Minecraft (Sweden based), or an even larger amount for Luxembourg based Skype. What can they do with that cash otherwise? It's not like they're going to repatriate (ever) without a tax holiday.
By the time companies come out of the US, they're typically already well on their way competitively and have scale.
It's the same reason China is so effective at producing giants like Alibaba, Xiaomi, and Baidu.
On the other hand, the scenario of a UK company owning a company in a tax-free zone in dubai and thus paying 0% taxes anywhere doesn't sound fair either.
Repatriation of those funds would essentially mean paying close to 35% tax (+ state taxes). DTTs don't fix that, they just make sure you don't pay the same amount twice. I.e. the 20% in the UK AND 35% in the US.
Add to that fact that Apple can pretty much borrow unlimited funds in the market (debt != income, you don't pay tax when you borrow) to fund share buybacks and dividends. Why repatriate? Financially it just does not make sense, since you'd lose so much of your equity. It's better to invest it abroad.
Re Dubai: If an entity is a conduit company, then maybe not. But if you're operating a business or selling stuff there, then I think it is. No income tax is more of an anomaly these days, and a way for countries to attract new business.
* Apple, Google, Microsoft et al. have many foreign workers (green card, H-2B, or maybe L1 visa) and it is easier for american citizens to move/work outside of US than foreigners to get work visa in US. So the question is, if a country (like Spain or Greece) promises tax advantage for next 25 years and makes easier to get visa for employees, would these companies move their hq there?
* If, say, European Union provides better shield, would Apple move its HQ to Germany or Spain?
* Infrastructure: I can say most European counties have better infrastructure than US and it looks like most us companies build their own if needed. With $500 billion on hand, what would prevent these companies to build a better infrastructure in a host country.
>If, say, European Union provides better shield, would Apple move its HQ to Germany or Spain?
Two words. Labor laws.
http://www.businessinsider.com/ceo-employee-lawsuits-killed-...
https://news.ycombinator.com/item?id=9663421
Although, while I'm not an expert on France's labor laws, I agree laws in most EU countries are on the side of employees. But that doesn't mean when you hired someone, he/she will be working at the company for rest of his/her life without doing some work. Maybe someone who's expert on labor laws can clarify.
Edit: Also different countries in the EU has different laws. It might be difficult to `get rid of bad employee` but it might be easier in Spain...
As someone who lives and works in the EU, none of the conditions seems to be particularly unreasonable. If you're talking about someone who isn't working, presumably you'd be firing them for cause. Which you can do: you need to follow a process and document that you're following it, you need to give them explicit warning that their performance is not up to par and give them the opportunity to fix it, and you need to do all of this within a reasonable timeframe.
The Mandriva guy was explicitly not doing that; if you're making people redundant then you're declaring that there was no problem with them specifically, the company just needs to eliminate those positions. If you then rehire people for those positions within the next few months, the courts tend to take a rather dim view of that.
It'd do a lot to reduce global warming by humans.
If the other family members decided it was a bad idea to send you money to your country because it will be taxed to death, can you blame them?
Why should I? Of course this is not actually what they are, or at least what they claim to be. That is, since money is fungible in a global economy they can in effect use untaxed funds to influence U.S. political campaigns while they claim they are a single person deserving of the same rights afforded by the constitution.
U.S. persons cannot do that. This is what I mean by the double standard.
Right, but of course being as many of the companies in question here were founded in the U.S. and made use of U.S. infrastructure to build their business, and are headquartered in the U.S., and rely on the U.S. labor force for a large part of their enterprise, it isn't accurate to call them non-american.
But what Apple does is enjoy all of that in the US to which it contributes sub-standard taxes, manufactures in China, sells in Germany, but pays Ireland a large portion of its taxes, which in Ireland are diminished to a small amount. That's quite silly.
Sure if Apple created an EU HQ and did a large amount of design, manufacturing, sales, engineering etc, then it's fine if pays taxes there. But it does all its engineering and design (the bulk of the company) in the US, but pays little taxes there.
Now it's one thing to say it's justified because Apple would have to go out of business and lay off thousands of of their 100k employees. But we can all take a look at that financial situation and make our own moral judgement on whether they should have effective tax rates much lower than a regular business.
I wonder what would happen if we passed an un-repealable law (if such a thing existed) that prohibited tax holidays for the next thirty years?
It's really not possible. We can even repeal constitutional amendments.
[1] http://en.wikipedia.org/wiki/Corwin_Amendment
The only argument I can see would be that repealing the amendment would implicitly grant power to abolish slavery, but that seems like thin ice to me.
The real danger is with the upcoming BEPS plan, and whether it will cause a rush of companies moving the high tech jobs fueling the economy as it is today overseas: http://www.nytimes.com/2015/06/10/opinion/obamas-corporate-t...
There are endless challenges to work on and we have tons of great people who would wholeheartedly work on these if they were paid well. The only barrier is capital and leadership ambitions. Apple can really put the world 50 years ahead in tech if they chose to invest the money in these areas.
That they know that money isn't everything when it comes to engineering, and just "getting the best" and "throwing tons of money" at a problem doesn't necessarily result in a good outcome? Especially if it's something outside their core expertise.
Apple, for example, consistently failed with their social attemps (Ping?), and their online apps (mail, docs, etc) which are also-run. Microsoft poured a lot of money into Bing, and it's still something nobody would use willingly (except a couple outliers who would respond to this comment as if nobody means "no one at all" in casual conversation).
And then there's the canonical example, Chandler:
http://en.wikipedia.org/wiki/Chandler_(software) http://www.dreamingincode.com/
Or let's take another company who is "all over the place". For all of Google's efforts in PR-driven research, what has it given us that was a success? The Glass was a huge failure, their attempt at social (Google+) too, GAE is an also-run, Dart got top talent but never got anywhere, and same with several other attempts that linger on or have closed down. Judging from their revenue report, it's all about ads still. (Sure, there's the self-driving car, that might be marketable someday, but for that Apple is said to have a team working on it too)
They also know that the company made all these money by having focus.
Finding a new area to explore is OK. Being all over the place is a recipe for failure. And Apple they ain't gonna do it just because it's a geek's dream e.g. ("space exploration company").
Android was Google's (though that was acquired too IIRC, albeit in a much different form), but while a market favorite, it's not a profit source for Google and it's also losing control of it (with Samsung, Amazon etc spinning their own versions). Even for mobile ads, most of Google's revenue comes from iOS devices.
>If they'd just stuck to search, where would they be now?
Mostly where they are, revenue wise.
They were very clear about this when they announced Android as free and open source.
To have to write a whole OS, buy Moto for multi-billion dollars, get the most market share of the market even, and then lose money on it and still get your ad money most of your competitor's mobile OS you don't control, is a little failure-ish...
Maps was a offline C++ project when they bought it... I think it's a bit of a stretch to say it was just acquired.
I doubt they'd be at the same place actually, since they are better at search now because they know more about you. Their results have improved remarkably since 2005, and I don't think that would be the case if they just stagnated.
With Chrome and Youtube, they also are a heavy influencer on web standards, and have done an amazing job at making those more open.
Google can get away with this as the CEO has a lot of credibility and also class B voting shares.
Not sure why you were downvoted for this observation.
And what do you think Apple is exactly doing?
My company have worked for them in the industrial side and let me tell you this strait: Apple could afford what nobody does, and they do.
You have never wondered why Apple is the one along three manufacturers(Samsung and Microsoft) that could create aluminum computers and not cheap plastic ones?.
The answer is billions invested in manufacturing plants. Apple always gets the best electronic components first because of being, for example, the biggest user of lithium batteries in the world(and the electronics that control it). They have a tremendous negotiation power and routinely screws one or two turns over manufacturers because they can.
Apple designs their own hardware at chip level, they are working on cars, like Google.
They park their money in debt instruments while doing the above like any other company does for getting liquidity.
"Apple can really put the world 50 years ahead in tech if they chose to invest the money in these areas."
I don't believe you understand the meaning of diminishing returns.
If you have more sex with a woman you don't have kids faster than 9 months.
When Microsoft competed against mosaic browser, Mosaic had like 20 employees or so, Netscape like 100, and Microsoft used like 2000. Microsoft browser did not get 20 times faster than Netscape.
So aluminum cases for computers is putting us 50 years ahead? Is it some kind of great innovation?
I don't think so.
LOL. As if a cheaper hotel room is relevant when discussing transactions in dozen of milions !!!