Apple Tax Strategy

Apple’s Tax Strategy

 

Steve Jobs Carves Apple’s Mark on the universe with Tax Strategy.

“Apple’s Steve Jobs was singular in his ability to take a company “on a path to die” and turn it into the world’s most valuable — in part by “casting spells,” billionaire Bill Gates said. Gates spoke of Jobs, the Apple Inc. co-founder and chief executive officer who died of pancreatic cancer in 2011, in a segment on leadership to be broadcast Sunday on CNN’s Fareed Zakaria GPS.

I was like a minor wizard because he would be casting spells, and I would see people mesmerized, but because I’m a minor wizard, the spells don’t work on me, I have yet to meet any person whom could rival Jobs “in terms of picking talent, hyper-motivating that talent, and having a sense of design of, “Oh, this is good. This is not good,”  Gates added of his sometime collaborator and competitor. ”Even when he failed, he succeeded. NeXT, the computer that completely failed, it was such nonsense, and yet he mesmerized those people.” NeXT ceased making hardware five years later, and in 1996 it was bought by Apple.”

Steve was obviously a genius. But one part of his genius has been very little reported on. His leadership genius.

Tax Strategy

Before Apple began their meteoric growth, they addressed the tax problem with the “Double Irish & a Dutch sandwich” tax strategy. That & Jobs’ innovations propelled them to the most valuable company in the world. But it wouldn’t have happened without the tax savings. Every dollar of tax saved drops straight to the bottom line as another dollar of cash, working capital, profits & competitive advantage created out of thin air.

Without first solving the tax problem, Apple would have always been watching from the sidelines as other companies beat them to the prize.

The Apple miracle

In a scant 14 short years, Steve Jobs single-handedly pulled Apple from the brink of bankruptcy and propelled the company he founded into the most valuable company in the world.

Following a long struggle with Apple CEO John Scully for control of Apple, jobs was demoted and resigned in 1985. After a hiatus of twelve years, during which he founded Pixar & Next, two similarly valuable companies, Jobs returned to Apple in 1997. He died in 2011 with Apple on the brink of becoming the most valuable company in the world.

Steve talked a lot about his goal to carve his mark on the universe. The study of Jobs provides a number of lessons about growing companies for every CEO, if they can follow them. 

Addressed the tax problem

Before Apple began its phenomenal growth, they first addressed the tax problem with The “Double Irish & a Dutch sandwich” tax strategy. That & Jobs’ product innovations propelled them to most valuable company in the world. Without first solving the the tax problem, they would have always been an also ran, despite the phenomenal products.

Billions of Dollars

Over the next two decades, Apple harvested billions of dollars in tax savings which quickly added massive amounts of cash to their balance and profits to their income statement, and advantage over competitors. Apple’s stock value grew steadily along with Apple’s profits, cash balance & competitive advantage. Every dollar a company drops straight to the bottom line as another dollar of cash, working capital, profits & competitive advantage created out of thin air. Apple’s billions in cash, harvested from their tax strategies, steadily built Apple’s Balance Sheet and pushed their value higher & higher.

Innovation leads to competitive advantage

Jobs’ innovation wasn’t limited to Apple products. He was genuinely & completely innovative. He was always looking for a better way to do it. Whatever “it” was.  Without those tax savings, it’s unlikely Apple would have achieved the competitive advantage necessary to thrive. .

So, are you having trouble carving your mark on the universe? Give us a call to get started on the right foot.

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