Rob Black's "Winners & Losers" April 30 Spain Sinks Market, Apple Avoids Taxes & Coke Needs Monster

By: Rob Black - Mon, 30 Apr 2012 15:11:24 -0800

 

Loser: Stocks Retreat on Spain Recession

Stocks fell, while the euro weakened for a third day against the yen, as reports showed Spain entered its second recession since 2009.  Europe is still considerably weak.

U.S. consumer spending rose 0.3 percent in March, while an Institute for Supply Management-Chicago report showed business activity expanded in April at the slowest pace since 2009.

The S&P 500  extended its April retreat to 0.8 percent. The index snapped a string of four monthly gains.

Barnes & Noble soared as much as 90 percent, its biggest gain ever, after Microsoft said it will invest $300 million in a venture with the bookstore chain.

Our world has changed so much that the two hated monopolists of the 1990s - Microsoft and B&N - must cling together to even stay relevant.

Loser: Homeownership Rate Falls to 1997 Level

The U.S. homeownership rate fell to the lowest level in 15 years in the first quarter as borrowers lost homes to foreclosure and tighter inventory and credit kept buyers off the market.

The rate dropped to 65.4 percent from 66 percent in the fourth quarter and fell a full percentage point from a year earlier.

That is down from a record 69.2 percent in June 2004.

Although house prices and mortgag erates have fallen to a level that makes buying preferable to renting, ongoing problems accessing mortgage credit are preventing many households from taking advantage.

The U.S. apartment vacancy rate fell to 4.9 percent in the first quarter, an 11-year low.

Homeownership may fall further and repossessions may increase this year as lenders step up foreclosures after a $25 billion agreement by the nation’s largest loan servicers in February to settle allegations of improper practices.

The ownership rate may drop below 64 percent by the end of 2015 and stay there for years.

Winner:  Monster Soar on Coke Rumors

Monster Beverage's shares soared on a report that Coca-Cola Co. is considering buying the energy drink maker.

If  it happens, the deal would be Coca-Cola's largest brand acquisition ever.

Coca-Cola is constantly looking beyond soda for growth. In its first quarter, Coca-Cola reported 4 percent global volume growth for its namesake soda.

Sales volume for its bottled water grew 15 percent worldwide. 

Sales volume for energy drinks rose 25 percent.

Monster Beverage, sells juices, sodas and other drinks under brands such as Monster Energy and Hansen's. In its last fiscal year, Monster’s  income rose by 35 percent to $286.2 million.

Coca-Cola's lineup of energy drinks includes Full Throttle, Fuze, burn and Gladiator.
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Winner:   Apple Uses Office Locations to Minimize Taxes

Apple, uses offices in states other than California, where it’s headquartered, and countries outside the U.S. to help minimize its overall tax burden.

The company has an office in Reno, Nevada, to collect and invest its profits and avoid paying California’s 8.84 percent corporate tax rate on some of its gains. Nevada’s tax rate is zero.

 The method, which is legal, is one of many that enables the iPad and iPhone maker to reduce its tax bill by billions of dollars each year.

Apple paid cash taxes of $3.3 billion worldwide on posted profit of $34.2 billion last year, and would have paid $2.4 billion more in U.S. taxes without the arrangement it has.

Technology companies, due to a tax code  skewed to an industrial age and not a digital one, are among the least-taxed businesses in the U.S.

In October 2010, Google  cut its taxes by $3.1 billion in the three years prior using strategies known as the “Double Irish” and “Dutch Sandwich,”reducing its tax rate internationally to 2.4 percent.

Apple also has subsidiaries in Luxembourg, Ireland and the British Virgin Islands that allow it to pay lower taxes on royalties or processed transactions

 

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