Apple’s massive $220 billion loss

MORE than $220 billion has been wiped from Apple’s value, the equivalent of entire companies such as IBM, Nike and PepsiCo.

The Apple Inc. iPhone 6s Plus smartphone is displayed for a photograph after a product announcement in San Francisco, California, U.S., on Wednesday, Sept. 9, 2015. Apple Inc. unveiled a wide-ranging lineup of new products, including updated iPhones, a revamped TV set-top box for playing games and watching videos, and a bigger iPad designed for business customers. Photographer: David Paul Morris/Bloomberg

THE most valuable company in America is having a rough time.

More than $220 billion has been wiped from the value of Apple since July, as the tech giant struggles with weakening demand for smartphones.

USA Today reports the latest drop, which saw shares in Apple close down 2.7 per cent on Friday to $US106.03, means the stock has officially entered “bear” territory, defined as a 20 per cent drop.

Apple shares are now down 21 per cent from their recent high of $US134.54, wiping $223.6 billion in market value — more than the market value of 477 companies in the Standard & Poor’s 500.

USA Today points out the drop in Apple shares, which are the most widely held among individual investors, is the equivalent of wiping out the entire market value of companies such as PepsiCo ($204.04 billion), IBM ($185.87 billion) or Nike ($155.13 billion).

It’s also greater than the value of Oracle ($220.11 billion), Citigroup ($219.97 billion), Philip Morris ($192.86 billion) and Cisco Systems ($189.50 billion).

Apple, which still has a market cap of about $850 billion, has been hit with a number of lowered earnings estimates from investment banks as it struggles to diversify away from the mature smartphone market.

Smartphone sales still make up the vast majority of Apple’s revenue.

TAX AVOIDANCE ‘CRAP’

It comes after Apple chief executive officer Tim Cook last week dismissed as “total political crap” the notion that the tech giant was avoiding paying taxes in the US.

Cook’s remarks, made on CBS’ 60 Minutes, came amid a debate in the United States over corporations avoiding taxes through techniques such as so-called inversion deals, where a company moves its tax base to another country.

Apple saves billions of dollars in taxes through subsidiaries in Ireland, where it declares much of its overseas profit.

“Apple pays every tax dollar we owe,” Cook told 60 Minutes’ Charlie Rose, according to excerpts from the interview released on Friday.

Cook said bringing profits back to the US would cost him 40 per cent.

“I don’t think that’s a reasonable thing to do,” he said.

The Senate Permanent Subcommittee on Investigations probed Apple’s tax strategies and found that Apple in 2012 alone avoided paying $US9 billion ($12.64 billion) in US taxes, using a strategy involving three offshore units with no discernible tax home, or “residence”.

Apple holds $US181.1 billion in offshore profits, more than any other US company, and would owe an estimated $US59.2 billion in taxes if it tried to bring the money back to the country, according to a recent study based on US Securities and Exchange Commission filings.

The tax code was made for the industrial age, and not the “digital age”, Cook said.

“It’s backwards. It’s awful for America. It should have been fixed many years ago.”

Originally published as Apple’s massive $220 billion loss