WINDING DOWN
An idiosyncratic look at, and comment on, the week’s net, technology and science news
by Alan Lenton
Tax dodges, Apple, Google Play store rules, climate change - the Antarctic and aerosols, modeling liquids, drops of pitch - the world’s oldest experiment, and Panoramio feature this week. In addition there are a couple of URLs pointing to the Visa WikiLeaks dispute, China and PCs, and the Pentagon and Chinese satellites.
I see that LinkedIn stock has fallen 10% this week. I put this entirely down to my announcement in last week’s Winding Down that I was no longer subscribed to LinkedIn.
Less stories, but a little more explanation in this week’s offering. I’m sure you’ll all find it fascinating! In the meantime I’m off to enjoy the fact that with Monday being a national holiday, this is a long weekend. I wish all my UK readers lots of sunshine, and a minimum of rain...
Apple's Pie:
I’m not sure what it’s like in the US, but here in the UK, tax dodging by the big companies is a hot issue, and the big tech companies are right there in the limelight. The general concept is fairly simple, although the details vary, and it’s usually completely legal. The system is really only open to multinationals, and takes advantage of the fact that countries have different tax rates. What you do is to make sure that the only bits of your empire that make a profit are the ones in low tax countries.
It’s not that difficult to do if you have the resources of a multinational available. For instance, one way to do it (simplifying things) would be to produce the goods in a high tax country and sell them at cost to another part of the company in a low tax country, and when the division in the low tax country sells them on, they accumulate the profit and pay tax at the lower rate. And of course, electrons are even easier to move around than manufactured goods!
Which brings us to the matter of Apple’s new debt sale bond issue, which could reach as much as US16 billion. This is really interesting, because Apple doesn’t have any debt! Quite to the contrary, it has something in the region of US$145 billion swilling around in cash reserves! The problem for Apple is that something like two thirds of that cash is in countries other than the US. Low tax countries. That’s a problem, because if you want to use it to pay shareholders and keep them sweet, you need to bring it into the US.
And therein lies the rub - if they bring the money into the US it will be liable to a 35% repatriation tax!
The solution, for Apple, is to issue bonds that are backed by all that overseas money. A bond is effectively a loan on which the issuer pays interest for a fixed number of years and then repays the amount of the initial loan. So, as long as the interest on the bonds is less than the 35% tax, the deal is well worth it for Apple, if it needs those funds in the US.
And Apple does need those funds, because with disappointing financial results (relatively speaking, but that is what matters to Wall Street) and a substantial drop in stock value, it needs to sweeten things for its shareholders by increasing dividends and instituting a share buy-back program. If there are less shares for a company, then, as a rule, each share is worth more, because it represents a larger share of the company.
But, of course, Apple will have to bring in that money some time - possibly when the bond become repayable, possibly earlier. So what’s the gain? Ah well, now we move into the realm of politics. For the US, there are definite political and economic advantages in having that money move into the country, over and above taking a 35% cut of it. And Apple is only one of a number of US multinationals that have a lot of offshore cash they’d like to bring home.
That’s why there is a lot of talk going round in high places at the moment of a repatriation amnesty. The idea is that for a limited period you allow people to move their assets and profits back into the country at a much lower rate than usual - say 10% tax. Even if it doesn’t happen for another five or even ten years, it will happen sooner or later, and then Apple can move its expatriate cash back in to the US at a much cheaper rate.
And that, my friends, is the reason why a company with US$145 billion in cash is borrowing money!
http://www.theregister.co.uk/2013/04/30/apple_bond_issue/
http://en.wikipedia.org/wiki/Bond_(finance)
http://www.zerohedge.com/article/companies-petition-obama-tax-amnesty-repatriate-cash-myth-cash-sidelines-crumbles
Short:
I see that Google has taken steps to ensure that if you get an app through the Google Play store, then the app can only be updated via the store. That’s a good move on Google’s part because it means that any updates will be subject to the same Google rules as the original app was. There are plenty of dangerous Android apps out there, but mostly they are ones that aren’t supplied through the Play store. Google’s action means that you won’t have an app that meets the rule when you get it from the store, but which then downloads something entire different, and malicious, later on. And the fact that it puts the kibosh on Facebook’s attempt to get round the rules is only cream on the jelly, on the butter on the bread!
http://www.theregister.co.uk/2013/04/26/google_play_terms_change/
Homework:
Last month wasn’t a very good month for the climate change aficionados. First off, a large scientific team which has been analyzing ice cores from the Antarctic has reported its findings. The cores, going back some 2,000 years, show that the current melting of the ice is nothing unusual, and has happened on a number of occasions in the past, most recently in the 1830s and 1940s.
The current events in the Antarctic (together with those in Greenland) have been predicted to have dire consequences involving drastic sea level rises and the inundation of most major coastal cities. Even leaving aside the obviously loony predictions of sea level rise - 43 feet according to Greenpeace - all the climate change ‘experts’ agree that there will be large enough rises to cause extensive flooding. However, I can’t find any records of extensive flooding in such low lying cities as New York or London, in either the 1940s or the 1830s. I’m sure somebody would have mentioned it!
The second report, coming at the end of the month, was about the role of atmospheric particles in keeping the planet cool. Scientists studying the atmosphere have long theorized about the existence and action of difficult-to-study atmospheric molecules known as “Criegee intermediates”. The report manages to nail down these elusive molecules, and their role in atmospheric heat regulation, and it looks as though they have even more cooling effect than do particles blown into the atmosphere in volcanic eruptions.
The report is cautious, but it recommends that future climate models need to take into account what is believed to be the significant cooling effect of these particles. Who knows, at this rate the wheel will soon turn full circle, and we may soon be starting to worry about global cooling, just as people were doing when I was a child!
http://www.theregister.co.uk/2013/04/15/western_antarctic_melting_nothing_unusual/
http://www.theregister.co.uk/2013/04/25/new_criegee_cooling_intermediate_probed/
Modelling liquid surfaces and movement realistically has always been a problem in computer games, which is one of the reasons why game designers tend to avoid it. 3D computer images are usually modelled as a bunch of triangles - small ones, but triangles nonetheless, and I think it would be fair to say that water abhors triangles! Now graphics library specialist, PhysX have come up with a solution which they call Position Based Dynamics. The URL contains an interesting video demo of how good it is - very good I’d opine.
So are we likely to see this sort of realistic model of water in the near future? Well, no... If the library is only just coming out, then the earliest published use could be anything up to two years away, because that’s how long it takes (at a minimum) to produce a major game. And it’s not likely to be retrofitted into games already under way either because of the technical problems involved, or because there is no need for it. Indeed it may take a lot longer than that if the process uses a great deal of computing power. In that case it could be quite a long time until you see it in a real game, as the designers wait for the computing power to catch up.
http://www.33rdsquare.com/2013/04/new-fluid-simulation-system-promises-to.html
Alert! You all have the opportunity to watch a critical moment in what is probably the world’s longest running experiment. It’s the Queensland University pitch drop experiment, which is currently live on the internet. In 1927, Professor Thomas Parnell began an experiment to demonstrate the viscosity of pitch. Pitch was sealed into a funnel and allowed to settle for three years, after which the tip of the funnel was opened and the pitch was allowed to drip.
Since the funnel was opened in 1930, eight drips have occurred. Nobody was there when it actually dripped those eight times. Now, after 83 years the ninth drip is about to occur! The cameras are out and you can view it live on the web. When it is actually going to drop no one knows, but it will be soon (for some value of soon...). Take a look - you might be lucky enough to be one of the first to witness a drop. If you miss it you’ll have to wait till around 2026 for the next drop!
http://smp.uq.edu.au/content/pitch-drop-experiment
For Geeks:
If you are into panoramic views, then I suggest you take a look at the Panoramio site. It’s a community driven site that links up superb community supplied pictures to an underlying map. The quality of the pictures is stunning and with the map links you can see exactly where they were taken. Highly recommended.
http://www.panoramio.com/
Scanner: Other stories
Court orders Visa partner to allow donations to WikiLeaks
http://www.theregister.co.uk/2013/04/24/iceland_supreme_court_wikileaks_ruling/
China became world’s BIGGEST PC market in 2012
http://www.theregister.co.uk/2013/04/30/china_pc_sales_beat_us_first_time/
Red faces as Pentagon leases Chinese satellite
http://www.theregister.co.uk/2013/05/01/china_leases_satellite_pentagon/
Acknowledgements
Thanks to readers Barb and Fi for drawing my attention to material for Winding Down.
Please send suggestions for stories to alan@ibgames.com and include the words Winding Down in the subject line, unless you want your deathless prose gobbled up by my voracious Thunderbird spam filter...
Alan Lenton
alan@ibgames.com
5 May 2013
Alan Lenton is an on-line games designer, programmer and sociologist, the order of which depends on what he is currently working on! His web site is at http://www.ibgames.net/alan.
Past issues of Winding Down can be found at http://www.ibgames.net/alan/winding/index.html.
