Friday, April 27, 2012

Apple Paid Half the Taxes of ExxonMobil in Q1 and Earned Four Times More Per Dollar of Sales



First Quarter 2012 ExxonMobil     Apple  
Revenue (Billions)$124.0$39.2
Income Taxes (billions)$7.7$3.9
Profits (billions)$9.5$11.6
Profit Margin (%)7.6%29.6%

First quarter financial results were reported this week by ExxonMobil and Apple, and a summary of some key statistics are displayed above.  Here's what will probably not be reported by the mainstream media:

1. ExxonMobil paid $7.7 billion in taxes in the first quarter of 2012, which was about double the amount of taxes paid by Apple - $3.9 billion.  

2. Apple earned $11.6 billion in profits during the first quarter, which was 22% more that ExxonMobil's $9.5 billion in profits. 

3. Apple earned $29.60 in profits for every $100 of sales in the first quarter, compared to ExxonMobil's earnings of only $7.60 per $100 in sales revenue, making Apple's profit margin almost four times greater than ExxonMobil's (29.6% vs. 7.6%). 

You probably also won't hear Nancy Pelosi calling for an end to Apple's tax cuts and tax subsidies as a way to finance the $6 billion it will cost to pay for a one-year extension of student loan subsidies.  And it's also unlikely that the Democrats will propose a "Reasonable Profits Board" to regulate the profits of Apple and other computer companies.  It's only Big Oil that gets constantly singled out for that kind of targeted "special" treatment.  Not to give any ideas to Pelosi and the Dems, but it looks like "Big Computer" might be a juicier target now than Big Oil.   

HT: Bob Loftus

14 Comments:

At 4/27/2012 4:04 PM, Blogger Steve Hamlin said...

Does anyone know how much the lease or royalty rates are that US oil producers pay the U.S. governmental entities for the oil extracted?

I'm curious about the economics of oil production, cost of inputs, and how much the profit margins are based on [$/bbl minus royalty rates] as opposed to [crack spreads a/k/a value-added].

If the input commodities (raw oil) for US producers are national assets, how does the nation make sure it is maximizing revenue in selling those assets?

 
At 4/27/2012 4:12 PM, Blogger Methinks said...

Oil companies are the focus of voter ire and they give more to Republican campaigns. Like the Kulaks, they are easier targets than the cool dudes at apple.

 
At 4/27/2012 5:48 PM, Blogger Benjamin said...

PR is everything.

 
At 4/27/2012 7:03 PM, Blogger Che is dead said...

A study conducted by the Department of Interior revealed that when combining the U.S. tax policy with royalty fees, only Venezuela takes more money from domestic oil producers. The report, released earlier this week, debunks a brief written by the Government Accountability Office.

Both pieces discuss the results of a fluctuating tax policy. When comparing the GAO’s 40-page brief to the departments 300-page study, it is apparent that the results are notably different.

The GAO brief concluded that the U.S. government provides an attractive business climate, but it only measured royalties and neglected to measure corporate tax.

The Department of Interior strongly disagrees with GAO’s findings, writing that the GAO’s attempt to guide tax policy by quantifying a “fair share” tax on oil producers “needs comprehensive reassessment.”

Nearly 64 percent of the revenue from oil producers in the Gulf of Mexico is marked for either income or royalty tax, according to the study done by the Department of Interior. -- The Daily Caller

 
At 4/27/2012 8:17 PM, Blogger Buddy R Pacifico said...

"4/26/2012 5:06:00 PM
Exxon Mobil profit falls in quarter"


"The company also said taxes paid rose 4.4% to $27.4 billion, despite the lower earnings in the period.

President Obama has argued that the oil industry no longer needs some of the tax breaks, given current prices and profit levels. But the industry argues it already pays more taxes than many other industries and that higher taxes would crimp its ability to hire more U.S. workers."


Hmmm

 
At 4/28/2012 8:10 AM, Blogger emi_me said...

hey check this new website www.countcode.com. It's a social network made for programmers, where you can download,share or upload source codes, where you can count your own code lines for free. You have access to the web forum and the web chatroom. we are happy to have you joined to our community!

 
At 4/28/2012 8:54 AM, Blogger VangelV said...

If the input commodities (raw oil) for US producers are national assets, how does the nation make sure it is maximizing revenue in selling those assets?

In what way is the oil a 'national asset'? The nation did not do the exploration. It did not drill the development wells to prove that extraction is viable. If I had the time I would argue that existing claims to land that has never been transformed by labour are invalid. That means that the government does not own such land and that it is free for anyone willing to mix their labour with it, including local communities or oil companies using hired labour, can obtain ownership.

Even if we ignore the argument above, all the government can do is auction off the right to develop certain areas. Once that happens the oil companies own the oil and have to pay the agreed royalty rate.

Now some will argue that royalties should be raised. But that cannot happen on existing contracts at lest under common law precedent. Even if we assume that the proposals are for future activity it is doubtful that the outcome will be as positive because the producers will simply choose to do something else with their capital and leave the risks to others until the supply shocks have driven the price of oil high enough to make the risks worth taking somewhere in the future.

 
At 4/28/2012 9:54 AM, Blogger MaggotAtBroad&Wall said...

This comment has been removed by the author.

 
At 4/28/2012 10:15 AM, Blogger MaggotAtBroad&Wall said...

Also look at Capital Expenditures. XOM reinvested $8.8 billion in CapEx. A fashionable narrative among the smart guys on Wall Street around the middle of last decade was that the big integrateds were "self liquidating". In other words, even though they were dumping huge amounts of money into CapEx trying to find new reserves, their proven reserves were actually flat to falling slightly from quarter to quarter. I no longer hear that they are "self liquidating". Maybe the advanced drilling and exploration technologies has resulted in new finds and able to classify more reserves as "proven".

Anyway, now compare XOM's reinvestment in CapEx to AAPL's.
Apple invested $2.7 billion for SIX MONTHS (its on a different fiscal year than XOM). Some analysts consider R&D a quasi-capital expenditure, so let's be charitable and include that. Apple spent $1.6B on R&D for six months. CapEx + R&D = $4.3B. If you annualize XOMs 1Q Capex it amounts to about $8.8B *4 = $35.2B. Annualize AAPL's combination of CapEx and R&D is $4.3B * 2 = $8.6.

So XOM has to re-invest 4x as much as AAPL to avoid losing ground. And for taking that risk, it earns the paltry ROI.

AAPL is far less capital intensive, highly dependent on intellectual capital rather than physical capital because it produces proprietary consumer brands - which at least for the time being is in a class all their own.

Yet policymakers are intent on demonizing and taxing "big oil", the very lifeblood of the economy, in an effort to shift public opinion to accept the politically connected highly taxpayer subsidized alternative energy industry.

It drives me insane.

 
At 4/28/2012 10:17 AM, Blogger juandos said...

"Does anyone know how much the lease or royalty rates are that US oil producers pay the U.S. governmental entities for the oil extracted?"...

Interesting question...

There is no date on this API posting: For onshore leases, the Minerals Land Leasing Act prescribes that a royalty share of one-eighth of the value of production be paid to the government. For offshore leases, the Outer Continental Shelf Lands Act sets forth a royalty rate of not less than one-eighth the value of production. The offshore rate for leasing beginning in 2008 is set at 18.75%...

This GAO document dated March 17, 2009 (a critique of Interior dept. policy apparently) made mention of the following: For example, the rental rates for 10-year onshore federal leases increase from $1.50 per acre per year for the first 5 years to $2 per acre per year for the next 5 years...

 
At 4/28/2012 12:49 PM, Blogger Dan said...

So what!!!
What does this have to do with the tax rate.....? It looks more like a difference in margins to me, different products have different margins, tech has much higher gross and net margins than oil, but what do I know....? I'm not a professor....

 
At 4/29/2012 9:35 AM, Blogger juandos said...

Speaking of Apple and taxes did anyone else catch this story from the NYT?

Yes, from a seemingly distraught New York Times we have the following: How Apple Sidesteps Billions in Taxes

The money line if you'll pardon the pun for me was this one: 'Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies'...

Baaad Apple!

LMAO!

 
At 4/29/2012 6:41 PM, OpenID Sprewell said...

juandos, I was going to post that link too. It's funny how the Democrat billionaires like Steve Jobs and Warren Buffett have their companies avoid taxes like crazy, then are hypocritical enough to come out for tax raises or more govt spending. :)

 
At 4/29/2012 8:30 PM, Blogger VangelV said...

juandos, I was going to post that link too. It's funny how the Democrat billionaires like Steve Jobs and Warren Buffett have their companies avoid taxes like crazy, then are hypocritical enough to come out for tax raises or more govt spending. :)

It is to be expected. Human nature is what it is, not what the GOP or Democratic Party hope it is.

 

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