thoughts on the bank of Apple's money problem

Pity poor Apple; the company has a $100 billion stockpile of cash that it only now has figured out what to do with now that Tim Cook is CEO - pay out dividends and buy back stocks over a three-year period. From the LA Times:

The company said it will pay shareholders $2.65 per share each quarter beginning in Apple's fiscal fourth quarter, which starts July 1. The company said it hopes the dividend will make Apple stock a more attractive investment to wider base of investors, including those looking to make regular income from owning the stock.
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In a conference call with investors this morning, Apple Chief Executive Tim Cook and Chief Financial Officer Peter Oppenheimer said the company would spend $10 billion on a three-year stock repurchase program. Apple is buying back shares largely to be able to award more stock to its employees without diluting the value of existing shares, which happens when a company slices itself into a larger number of smaller shares.

The company said it would spend about $45 billion on the combined initiatives over the next three years.

Good news, then, for those people who want to make money without working for it - "those looking to make regular income from owning the stock." Apple's got your bank account covered. And what of the other $55 billion? No mention of that.


While the business news is abuzz with talk of dividends, the real issue goes unexamined; how did Apple amass such a large cash stockpile in the first place? Being stingy to investors is one answer. Apparently, Apple hasn't issued a dividend payment in more than a decade according to Yahoo!Finance. But let's consider alternative explanations, beginning with the following reminder:


profit = price - cost


Alternative 1: Apple's massive profits arise from a cost that is too low relative to what its products sell for, which means that the manufacturers are being short-changed ("exploited" in revolutionary-speak). Considering that Apple has succeeded in selling pricey products, it seems reasonable to conclude that customers at least tacitly accept that the high prices reflect the high value of the products. I'd argue that Apple depends, in part, on the high prices to drive the impression of a premium brand, raising the question of whether the market would rate Apple so highly if it offered dirt-cheap products.


Alternative 2: The manufacturers are reasonably paid, and it is the price that is too high relative to the cost. In this case, it means that Apple customers are being overcharged for the products they buy. Cue Steve Jobs real marketing genius; persuading people to dish out more money than they should for products they don't really need.


The overall conclusion is: whether Apple is scrooging investors, underpaying manufacturers, or overcharging customers, its $100 billion of stockpiled cash is the result of an exploitative business strategy, aided and abetted by an uncritical customer base susceptible to hype. Some would gush about how that makes Apple a capitalist success story. I'd argue that by extracting considerably more money from the economy than it puts in, it makes Apple the poster child of exactly what's wrong with our capitalist economy and consumerist culture.

news from around the world: week of october 14, 2011

A light reading list for this lovely Friday. Stay tuned for a book review and, next week, one or two quick film/TV reviews.

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Mike Daisey goes after Apple, the late Steve Jobs

As a pithy slogan in Alice: Madness Returns points out, "If the living can be spoken ill of, why not the dead?" While I would prefer it to be otherwise, I remain convinced that, with a few exceptions, Apple has been a destructive influence on the world.

Republicans Advance Bill to Slash Funding for UN

Maybe the Republican leadership could petition to leave the human race, since clearly doing something for the good of all goes against their principles?

Rick Perry officials spark revolt after doctoring environment report

It's a proven fact that if you deny facts hard enough, the very fabric of reality will warp into Care-a-lot, land of the Care Bears. Of course, it's really the goateed mirror-universe version in which the Don't Care Bears, led by Dollar Bear, attempt to sell their land of Pay-a-Lot to a villainous lot of impoverished peasants.

news from around the world: week of october 7, 2011

Links to a few interesting articles...

Biometrics at Pizza Hut and KFC? How Face Recognition and Digital Fingerprinting Are Creeping Into the U.S. Workplace

All those dystopian science-fiction movies warned us about this sort of thing...but who pays attention to science-fiction movies?

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Beating Butter: Denmark Imposes the World's First Fat Tax

If taxes are high enough so only the wealthy can afford healthy foods, would Denmark return to the Middle Ages when the aristocrats were overweight and the peasants were healthier because they didn't each rich foods every day?

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DC Comics superheroes in a flap over Amazon Kindle Fire deal

DC bizarrely chose to limit its digital distribution options by joining with Amazon and shutting out Barnes & Noble, effectively giving preferential treatment to Amazon's kindle at the expense of B&N's Nook. So why should B&N support a company that deliberately chose to enter into an exclusive contract with a competitor? I'm with B&N on this one.

no teabagging zone

Well, today is Tax Day, which means two things: lots of sweaty people, and an extra dose of right-wing frothing at the mouth. You see, there are tax protests going on. Apparently, it's all a manufactured stunt by Republicans and conservativs, a fake grassroots efforts hilariously referred to as AstroTurf by the folks who exposed the Goliath behind the seeming David. The kicker, though, is that these "Tea Parties" have been referred to by another name, mostly, I gather, by those of us who think the anti-tax protests are hopeless and paranoid pop-conservative caricatures of tax policy who were conspicuously silent when Bush held the US of A Unlimited Express Credit Card. They've been referred to as teabagging.

Of course, I'd love few things more than a reformed tax code and sensible fiscal policy, and I'm not sure Obama and Geithner are going to accomplish it. I still think the protests, cheered on by the likes of Glenn Beck, are poorly conceived, poorly motived affairs. In their honour, I offer the following film clip:

do you throw your shoe at us, sir?

An adaptation of a fragment from Shakespeare’s Romeo and Juliet, Scene 1, in honour of the monument dedicated to the Iraqi journalist who threw his shoes at then-President Bush. The monument was taken down not long after it was put up, but at least we’ll always have the pictures.

Gregory: I will frown as I pass by, and let them take it as they list.
Sampson: Nay, as they dare. I will throw my shoe at them; which is a disgrace to them, if they bear it.
Enter ABRAHAM and BALTHASAR.
Abraham: Do you throw your shoe at us, sir?
Sampson: I do throw my shoe, sir.
Abraham: Do you throw your shoe at us, sir?
Sampson (to Gregory): Is the law of our side if I say ay?
Gregory: No.
Sampson: No, sir, I do not throw my shoe at you sir; but I lob my shoe, sir.
Gregory: Do you cobble, sir?
Abraham: Cobble, sir? No, sir.
Sampson: If you do, sir, I am for you: I stitch as good a man as you.
Abraham: No better.
Sampson: Well, sir.
Gregory (to Sampson): Say 'better'; here comes one of my master's kinsmen.
Sampson: Yes, better, sir.
Abraham: You lie.
Sampson: Awl, if you be men! Gregory, remember thy skiving blow.
(They make shoes.)

it's not a miracle

New York Governor David Paterson apparently referred to the perfectly performed emergency landing of US Airways Flight 1549 as “a miracle on the Hudson.”

It’s not a miracle.

Miracles, by definition, are impossible, violations of the laws of nature usually held to be achievable only through divine/supernatural intervention. So it did take some imaginary entity to pull off the feat of landing a plane safely and without any casualties? Nope; this is strictly human stuff. And that’s the whole thing; if it can be explained naturally, if it isn’t even remotely beyond the bounds of human achievement, it’s not a miracle no matter how unlikely.

Of course, there’s a bit of a problem, namely, that we don’t know the universe close to well enough to know what is truly possible and impossible. We’ve only scratched the surface. And without knowing that, how we can possibly judge whether something is a miracle or not? Oh, I know, this is just rhetoric on Governor Paterson’s part, something to say because it seems so awesome that the plane landed on the Hudson river and no one was killed or seriously injured. But at the risk of being cranky: safe landings are what pilots are trained and paid to do. Remarkable piloting? Sure. But are we so accustomed to incompetence and people screwing up that when it gets done right we invoke divine intervention, even if only rhetorically? Okay, after 8 years of the Bush Administration, I can understand that competence has become a novelty. But still. Let’s all breathe a sign of relief that everyone is safe, step away from the crazy miracle talk, and move on.

translating the news: palin's alaska report

From an AP report on Alaskan lawmakers meeting in secret to discuss a report on whether or not Gov. Palin abused her authority in the firing of her state public safety commissioner (who, in turn, was being pressured to fire a state Trooper involved in nasty divorce and custody battle with Gov. Palin's sister):

Some Republicans have questioned why the committee has insisted on finishing the investigation Friday, which they said was an arbitrary date meant to damage the McCain-Palin campaign with less than a month to go before Election Day.

Translation: We don't care if she's guilty or not, and you won't either because after she's elected, there's fuck-all you can do about it. Except whine. Which is what liberals do. Neener-neener, you justice-loving liberal pansies.

The McCain campaign sought to pre-empt the potentially embarrassing report this week by releasing its own analysis, attributing Monegan's firing to a legitimate dispute over budget priorities and control over the department.

Translation: We've investigated ourselves and can say with complete and pure objectivity that we are not guilty. Let's be clear: we did not have improper power trips with that public safety commissioner's job. Oh, and we [heart] Dick Cheney. I mean, we really [heart] the big lug. He can shoot us in the face any day. That's how much we [heart] him.