We are updating this blog during the live congressional testimony of Apple CEO Tim Cook. More details will be added soon.
Apple’s CEO Tim Cook came out firing during his Congressional grilling, declaring, “we pay all of the taxes we owe, every single dollar”. A blistering senate investigation accused Apple of shady tax dodging, helping it avoid $13.8 billion in taxes.
In his opening testimony, Cook affirmed its position that “we don’t rely on tax gimmicks” to avoid paying any taxes (for a review of how Apple stashes cash oversees, see our previous post).
Cook had supporters on the panel, especially Senators Clare McCaskill and Rand Paul, a known libertarian who favors dramatically lowering the corporate tax rate.
Paul wigged out on his fellow senators, accused them of vilifying a great American company for fulfilling their responsibility to maximize shareholder value
[twitter https://twitter.com/SenRandPaul/status/336848667552145409%5D
[twitter https://twitter.com/SenRandPaul/status/336867611868536832%5D
McCaskill admonished Paul for his accusations against his senate colleagues, but made sure to note that “I. Love. Apple…I harassed my husband until he converted to a Macbook”
Cook, for his part, lobbied for a simpler U.S. tax code, which should “revenue neutral, eliminate all corporate tax expenditures. a reasonable tax rate on moving foreign cash back to the us. we make this recommendation with eyes open, knowing it would probably raise our own tax payouts.”
Cook admitted his gave his tax recommendation, “fully recognizing that this would result in an increase in Apple’s US taxes”.
Last year, Twitter announced something it called the Innovator’s Patent Agreement (IPA), which would keep patents in the hands of the designers and engineers that came up with the technology behind them. What this agreement serves as is a promise to only act on a patent for “defensive purposes.” Anything outside of that scope would need to be signed off on the creator of the patent itself.
Here’s how Twitter defines “defensive purposes”: “Defensive purposes means that you can defend yourself should another party try to initiate patent litigation against you or your customers or users. Under the IPA, it also means that you can use these patents against anyone who has sued others offensively in the past (up to ten years).”
The first patent to get the IPA treatment is Loren Brichter’s pull to refresh user interface interaction, which was built into Tweetie, the Twitter app that was acquired by the company and adopted as the official client.
Basically, Twitter is saying it’s not going to go after companies that are using pull to refresh, or other parts of Brichter’s patent, within their app. If someone were to claim to have created the functionality first, only then would Twitter defend itself.
Twitter has also announced that two other companies, Biz Stone’s Jelly and the Lift task tracking app, will also be adopting the Innovator’s Patent Agreement. With so many ideas running around, there should be no reason why the first person to successfully file a patent should hold the power to make everyone’s lives miserable. At the end of the day, all companies benefitted from Brichter’s work, and it’s been nice to see Twitter not going after anyone else for replicating parts of it.
When the IPA was announced last year, Twitter VP of Engineering Adam Messinger had this to say:
This is a significant departure from the current state of affairs in the industry. Typically, engineers and designers sign an agreement with their company that irrevocably gives that company any patents filed related to the employee’s work. The company then has control over the patents and can use them however they want, which may include selling them to others who can also use them however they want. With the IPA, employees can be assured that their patents will be used only as a shield rather than as a weapon.
Using patents as a shield will hopefully slow down the rampant patent trolling that has plagued the technology space for the past ten years. Twitter, Jelly and Lift promise not to be trolls, and that’s a good thing.
You can read the full IPA draft here to see if it’s something your company would want to adopt.
[Photo credit: Flickr]
Social media promotions are one surefire way to get your followers up on Twitter or boost those likes on Facebook. You can boost engagement and get your brand out there. If you’re offering something good (Apple products like iPads are a very popular social media giveaway), you can see huge numbers of people getting involved.
But it has to be done right to get you the engagement you want. Anyone who wants an iPad will “like” or retweet something for the chance to win, but many won’t bother to find out anything about your business, if it’s that easy to get involved in your social promotion. The key is to make participants really think about what you do. How?
Well, first, you want to give away something of value, but something that’s connected to your business in a real way. So if you provide a software solution, perhaps the winner gets one free year of your software. This ensures that the people who are entering and following and liking are actually potential customers. And how about every entrant has to tell you in a tweet why they need what you’re giving away? If it’s productivity software, maybe they’ll say, “I need your software because I want to double my work output.” And/or make it fun. Have everyone write a haiku about your business, or have them take a picture of the weirdest thing in their office/on their desk.
Finally, know the law. Here’s a look at the legalities of social promotions.
There are some great ways to do social promotions and get valuable data out of it. For instance, Splurgy and Grosocial allow you to create and automate social media campaigns. The lighter weight Splurgy is free to use, while the powerful Grosocial costs between $30 and $60 a month. Check out our closer look at Grosocial here.
Let us know in the comments how you do social promotions and what your experience with them has been!
The post Best Practices for Social Media Promotions: Get More Followers, Engagement, and Sales appeared first on Small Business Technology.
There’s no shortage of channels for brands and celebrities to stay in touch with their customers, followers and fans in these socially connected times — whether it’s Facebook, Twitter, Instagram, Pinterest, Vine, YouTube, you name it. Of course, that doesn’t mean there isn’t room for something more. Today’s addition to the mix is the launch of a broadcasting and animation platform for smartphones called Headcast which lets brands and celebrities record and push out short voice messages to their audience — accompanied by an animated, virtual avatar which lipsyncs with the voice recording and can also mimic hand gestures and facial expressions.
The company behind the tech, HeadcastLab, describes these broadcasts as “visual tweets” since they are limited in duration to 60 seconds, so have the same bite-sized character as a tweet, but are also designed to be watched, thanks to the avatar component. There’s no getting away from the uncanny valley phenomenon here, but presumably in an effort to make that effect comic rather than sinister, the avatars have a cartoonish air, rather than going after exact photo-realism.
The cartoonish air can also be explained by HeadcastLab’s CEO’s background as a designer and builder of puppets and characters. Chris Chapman also ran the animatronics team at Spitting Image Projects and went on to join the creative team. HeadcastLab was founded in 2011, after Chapman had also co-founded smart interface business ElekSen.
British actor and tech lover Stephen Fry is the first to launch a Headcast-powered app, called Fry, on iOS. Fry is also a small investor in Headcast, holding a sub-one per cent stake in the company. Other investors are David Gilbert, former chief operating officer of Dixons, and Charles McGregor, founder of Fibernet, along with CEO Chris Chapman. Headcast’s total funding to date is £340,000, through two separate funding rounds.
Here’s how the technology works from the presenter side:
Headcast performers, such as Stephen Fry, simply speak into their tablet device in ‘self-animator’ mode to record the audio, their character auto-lipsyncs and the in-built technology then animates the character, faster than sending a Tweet. Extra animations, such as trademark gestures, shrugs and topical images within the background, add extra life to the Headcast and can be included at the touch of a button. The followers receive the Headcast within a minute and can interact through the use of polls to gauge fan opinion, tapping the character, and adding sequences into the Headcasts.
Following its iOS launch, with Fry as the first celebrity on board, Headcast’s platform is due to launch on Android in July.
Headcast CEO Chapman said Fry is “just the first of many” brands and celebrities that will be launching on the Headcast platform. “We are looking forward to shortly revealing many other global stars, in particular from the sport and music industries,” he said in a statement.
Editor’s Note: Semil Shah is a contributor to TechCrunch. You can follow him on Twitter at @semil.
Apple has a good deal of cash. And, in the Valley, the startup ecosystem — for many reasons — wants to see Apple spend that cash. As their cash pile continued to grow as their stock price and market cap soared, Apple’s inability to provide robust software services combined with opportunities to expand their reach through acquisitions has become a fancy parlor game which includes every stripe of public and private investor imaginable. On top of this, pumping even a small percentage of cash pile into acquisitions could provide another pool of much-needed liquidity for founders and investors alike. While it all makes sense on paper, part of what makes Apple “Apple” is that they operate how they want to — not how the market wants them to. Recently, in response to a variety of pressures to do something, to do anything, Apple announced a two-part share buyback. There are many explanations for this financial strategy, and while the Valley may have their own armchair financial analysts with a Twitter account, I reached out to some friends who actually work in technology banking or at techonology-focused hedge funds and asked them to send me a paragraph on their perception of the move. Because of the world these folks work in, I’ve reproduced their answers below anonymously, as they are not permitted to publicly share their opinions on such matters:
Technology Investment Banker: With the amount of cash stock piled by Apple, and mainly overseas, it was only a matter of time until the water would break, especially with activist investor David Einhorn ruffling feathers. Apple did something very standard and not uncommon, but on a large scale the way Apple likes to do things. At the end of the day I feel Apple’s actions represent the following four points: (1) Increased Shareholder Value: There are many ways to value a profitable company but the most common measurement is Earnings Per Share (EPS). If earnings are flat but the number of outstanding shares decreases. . Voila! . . A magical increase in period-to-period EPS will result; (2) Higher Stock Prices: An increase in EPS will often alert investors that a stock is undervalued or has the potential for increasing in value. The most common result is an increase in demand and an upward movement in the price of a stock; (3) Increased Float – As the number of outstanding shares decreases, the shares remaining represent a larger percentage of the float. If demand increases and there is less supply, then fuel is added to a potential upward movement in the price of a stock; and (4) Excess Cash: Companies usually buy back their stock with excess cash. If a company has excess cash, then at a minimum you can bank that it doesn’t have a cash flow problem. More importantly, it signals that executives feel that cash re-invested in the corporation will get a better return than alternative investments. This is definitely a positive sign for the company going forward. Customers and investors should feel confident with these events transpiring that Apple will continue to deliver value to both parties respectively.
Technology Hedge Fund Principal: Since Apple has around $150B cash on the books (70% of which is foreign), it’s clear they need to do something with this cash because it’s just wasted sitting on the balance sheet earning low interest rates. People have assumed the market would respond well to Apple making acquisitions, especially in software and services, particularly in cloud and mobile software. While they have reaped the benefits of profits in mobile hardware, the value going forward is at the application and services layer. Other hardware manufacturers are catching up, if they haven’t caught up already. Unfortunately, Apple doesn’t seem to have an appetite for these types of acquisitions. Another option is to buy back shares, a proven way to deploy cash, though doing so sends a signal that they are a mature (read: not growth) company. Tactically, buybacks can decouple EPS growth from new product lines, and Apple could see 2x its buyback investment in earnings growth as a result. Ultimately, Apple has withstood significant pressure from the investment community to do something with the cash, especially as growth has slowed. (Venture arms, since you asked, are not an effective use of capital for a corporate player; I see the share repurchase as a much more responsible use of proceeds.
Hedge Fund Partner #2: Apple had four basic choices of what to do with their cash, remembering that apple has a duty to its shareholders: (1) Do nothing (status quo), which makes zero sense. given that they have ~$145Bn in cash and are adding ~ $40Bn in cash annually assuming zero growth earnings earning; (2) Strategic acquisition or expansion, though Apple will be hard pushed to effectively put either their cash hoard or future cash flows to use to do this; (3) a one-time special dividend and increased annual dividend; or (4) a share buyback (or various form of it). Only options #3 or #4 made any sense to me and I assumed it was only a matter of time before they did something. #1 is out as they are would not be meeting their shareholder responsibility and #2 is out simply because of scale.
I see the share buyback as positive for three key reasons: (1) Apple stock is currently very cheap. My back of the envelope calculations conservatively value them at $500-$550/share, so they are effectively leveraging and creating additional shareholder value here until the multiple recovers to fair value. What’s more is that management knows a lot more than what we all do, so they should be able to calculate their own value in two to three years fairly well, and I assume they saw this as a positive. (2) Because Apple issued bonds to finance the deal rather than using cash, this way they will not need to repatriate taxable offshore cash to perform the buyback and they will likely get a bond rate the crazy low prices. Bottom line, they are saving shareholders cash, although at some point they will need to find a way to address the offshore cash, so perhaps they are waiting for another tax holiday. And (3), assuming the market reacts rationally, a buy back signals that managements believes in stock and the story and believes that this will generate returns that will outperform for long-term investors, something that a cash hoard did not address at any level and effectively generate returns far in excess of what could be achieved in any other safe manner.
More often than not I do not like share buybacks. often management does this to boost their own salary bonuses (EPS biased etc) or simply follow bad advice and follow the investment banking herd, but this time I liked Apple’s share buyback at this share price and multiple and applaud the debt financing way of doing it, I would have applauded it more if they had also issued a $40 special dividend.
Hedge Fund Partner #3: The view is Apple has stopped being an innovator. While they were at the forefront of technology, people bugged them to use their cash for a dividend or buyback and they could say “no” because the stock price was going up on leading edge innovation. Once Jobs passed away, Tim Cook hasn’t been able to keep that going, and if anything they are now playing catch-up to Samsung or even Google. When you aren’t innovating and you have $150B in cash, a board has to find ways to keep investors happy and one tactic is to conduct a massive buyback. Showing they are returning money to shareholders, creating a new base if “capital return” investors rather than growth investors. It’s all a game to prop up the stock price, money is cheap because of Bernanke, so it’s an easy way for them to please shareholders without much cost to the business. In general, I think that Apple is falling behind and trying to figure out how to regain their lead, and I’m not sure if its possible any time soon.
Technology Stock Investor: They’re doing the buyback because: 1) they have an unprecedented amount of cash ($140+ billion) that’s earning nearly nothing; 2) the stock is down nearly 40% from its high and shareholders are angry; 3) the stock is cheap on every financial metric, signaling that buying shares is a good use of cash if you believe in the long-term growth of the company. The company does not appear to want to do a large acquisition or massively increase its capital expenditures. They don’t “need” to hold that much cash. So the company had a very inefficient capital structure ($140+ billion of cash and no debt). Equity investors (who, in the end, own the company) sooner or later demand to get returns on their companies’ cash. Capital markets are competitive, and if management doesn’t give investors great reasons to own their stock, investors will go somewhere else. AAPL is facing slowing revenue growth, margin pressure, and uncertainty about their next major product line. A management team that is perceived as unfriendly to shareholders is another reason for investors to sell the stock. The buyback is a big gesture by management that they understand their shareholders’ concerns, in addition to likely being a good investment.
Photo Credit: Eddi 07 / Flickr Creative Commons
