Happy Halloween! There's nothing too spooky about our final Morning Report for the month of October, unless you're an Apple shareholder or Samsung — in which case our Friday edition is likely to be full of ghosts and goblins guaranteed to keep you up late tonight.
Irish Tax Structure Could Bring Change, Apple Warns Shareholders
The Wall Street Journal today reported that Apple appears to be bracing for increased tax rates in the future as part of a recent European Commission decision to buckle down on generous shelters in countries like Ireland. The potentially bad news was delivered to Apple shareholders in the company's annual 10-K filing (PDF link) to the Securities and Exchange Commission this week.
"Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change," the filing noted. "If the European Commission were to take a final decision against Ireland, it could require changes to existing tax rulings that, in turn, could increase the Company’s taxes in the future. The European Commission could also require Ireland to recover from the Company past taxes reflective of the disallowed state aid."
According to tax experts in London, Apple could be on the hook for as much as $200 million in back taxes in addition to paying more for two Irish subsidiaries, which are responsible for more than 4,000 employees at the company's Cork facilities alone. The EC claims Apple paid less than €20 million ($25.4 million) in Irish taxes between 2010 and 2012.
Apple Could Be to Blame for Samsung's Sagging Fortunes
AppleInsider published an in-depth look Thursday at how Apple could be to blame for Korean smartphone giant Samsung's recent reversal of fortune, which saw a dramatic 73.9 percent drop in mobile profits in the third quarter alone. While it's true that Samsung is facing increased competition from other Android OEMs including China's fast-rising Xiaomi, the staggering $4.7 billion year-over-year collapse in quarterly profits has roots in Cupertino.
According to IDC estimates, nearly a third of Samsung's total unit sales have been made up of so-called "premium" smartphones like the Galaxy S and Galaxy Note lines — the exact products Apple have recently began to target with larger "phablet" style devices like the iPhone 6 and iPhone 6 Plus, which come with "clearly differentiated features" such as a 64-bit CPU, Touch ID, and Apple Pay.
Also working against Samsung is the fact the manufacturer has never had any real success with its own tablet devices, as well as increased marketing costs to reduce the costs of mobile products as Apple continues to profit handsomely from iPhone and iPad. That leaves Samsung with only high volume, low margin handsets — the exact market Android rivals have been chipping away at with their own devices.
New Retail Store Coming to Lille, France Next Month
Oui, oui! MacRumors today reported that a new Apple retail store is coming soon to Lille, France, the iPhone maker's eighteenth such location in that country. According to MacGeneration (via Google Translate), the roughly 15,000 square-foot store is now shrouded by black barriers, suggesting a grand opening could be right around the corner — possibly as early as the end of November. Apple plans to open 25 new stores in 2015, with most of them located outside the United States.
Follow this article’s author, J.R. Bookwalter on Twitter