Apple uses companies outside U.S. to avoid paying billions in U.S. taxes, Senate inquiry finds

By The Associated Press - Monday, May 20, 2013 at 5:57 PM - 0 Comments

WASHINGTON – Apple Inc. employs a group of affiliate companies located outside the United States to avoid paying billions of dollars in U.S. income taxes, a Senate investigation has found.

The world’s most valuable company is holding overseas some $102 billion of its $145 billion in cash, and an Irish subsidiary that earned $22 billion in 2011 paid only $10 million in taxes, according to the report issued Monday by the Senate Permanent Subcommittee on Investigations.

The strategies Apple uses are legal, and many other multinational corporations use similar tax techniques to avoid paying U.S. income taxes on profits they reap overseas. But Apple uses a unique twist, the report found. The company’s tactics raise questions about loopholes in the U.S. tax code, lawmakers say.

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Apple to dole out $100B to shareholders

By Peter Svensson, The Associated Press - Wednesday, April 24, 2013 at 10:39 AM - 0 Comments

NEW YORK, N.Y. – Apple is opening the doors to its bank vault, saying it will distribute $100 billion in cash to its shareholders by the end of 2015. At the same time, the company said revenue for the current quarter could fall from the year before, which would be the first decline in many years.

Apple CEO Tim Cook also suggested that the company won’t release any new products until the fall, contrary to expectations that there would be a new iPhone and iPads out this summer.

Apple Inc. on Tuesday said it will expand its share buyback program to $60 billion — the largest buyback authorization in history. It is also raising its dividend by 15 per cent from $2.65 to $3.05 per share. The dividend yield will be about 3 per cent at current stock prices. The average yield for the top 20 dividend-paying companies in the U.S. is 3.1 per cent, according to Standard & Poor’s.

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Speculation mounts on future of CEO Tim Cook ahead of Apple quarterly results

By Emily Senger - Monday, April 22, 2013 at 11:02 AM - 0 Comments

Apple Inc CEO Tim Cook. (Stephen Lam/Reuters)

Apple is scheduled to release its second-quarter earnings Tuesday amid some speculation that current CEO Tim Cook’s days could be numbered.

This speculation comes, mainly, from Forbes.com blogger Gene Marcial, who says people who know executives who work at Apple say those executive are thinking it’s time for a shakeup at the company. Investors saw Apple’s stock price hit a record-high under Cook in September, but have then watched that price fall by about half.

However, others are raising questions as to just how accurate Marcial’s report at Forbes.com is. At CNN Money, Philip Elmer-Dewitt points out that the Forbes business model — based on “incentive-based, entrepreneurial journalism” — is driven by clicks and anti-Apple posts get those clicks. Others who are suggesting Cook is on his way out also have something to gain, writes Elmer Dewitt. “As far as I know, he [Cook] still has the deep respect of the analysts who know the company best and — most important — the confidence of the board of directors who granted a million restricted shares of Apple as an incentive for him to stick around for at least a decade,” he writes.

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Apple stock falls to one-year low

By The Associated Press - Wednesday, April 17, 2013 at 9:42 AM - 0 Comments

NEW YORK, N.Y. – Shares of Apple Inc. are setting a one-year low after news from a supplier hinted at a slowdown in iPhone and iPad production.

The stock is down $18.48, or 4.3 per cent, at $407.76. The shares hit $403.67 earlier, the lowest level since Dec. 2011.

Late Tuesday, Cirrus Logic Inc., which supplies audio chips for the iPhone and iPad, said sales of a particular chip are slowing down as a customer moves to a newer component.

Analyst Peter Misek at Jefferies & Co. said Cirrus’ news suggests a big decline in Apple sales in the April to June period. That supports his view that Apple is unlikely to launch a new iPad Mini in the quarter, and that the next version of the full-size iPad may launch late.

Rumours continue: New iPhone coming this summer, lower-cost iPhone in development

By Emily Senger - Wednesday, April 3, 2013 at 9:31 AM - 0 Comments

Photograph by Andrew Tolson

Production of the newest version of the iPhone will begin this quarter, at the same time that Apple designers are at work on a lower-cost iPhone model, unnamed sources are telling The Wall Street Journal.

When it comes to the next version of the iPhone, production in this quarter means the phone could be released as early as this summer, with the cheaper version of the iPhone likely to be released in the second half of 2013. (In time for Christmas, perhaps?)

The Wall Street Journal writes:

“Apple continues to work with its manufacturing partners in Asia on a less expensive iPhone that could be launched as soon as the second half of this year, these people said. The four-inch device likely will use a different casing from the higher-end iPhone.”

This is the second time The Wall Street Journal has reported on this cheaper iPhone in the works, with the first report coming in January 2013. That report said that Apple could also decide to scrap the cheaper iPhone plan altogether.

Renewed rumours of a cheaper iPhone come as Apple faces increased competition from other smartphone makers at a variety of price points. Notably, the Samsung Galaxy S4 — with its giant screen and multiple features — may be making Apple a little uncomfortable.

The rumours also come as Apple stock is taking a hit. While it still closed at $429.79 per share Tuesday, Apple stock remains well short of its record high of $705.07 on the day the iPhone 5 was released in September. On Tuesday, Goldman Sachs Group removed Apple Inc. from its list of most highly recommended stocks, reports The Associated Press, and analysts just won’t stop reminding investors that Apple hasn’t done anything truly revolutionary since it released the iPad in 2010.

Apple apologizes in China over service policies, but state media attacks seen backfiring

By The Canadian Press - Tuesday, April 2, 2013 at 6:22 AM - 0 Comments

BEIJING, China – Apple apologized to Chinese consumers after government media attacked its repair policies for two weeks in a campaign that reeked of economic nationalism.

A statement Apple posted in Chinese on its website Monday said the complaints had prompted “deep reflection” and persuaded the company of the need to revamp its repair policies, boost communication with Chinese consumers and strengthen oversight of authorized resellers.

State broadcaster CCTV and the ruling Communist Party’s flagship newspaper, People’s Daily, had led the charge against the American company. They accused Apple Inc. of arrogance, greed and “throwing its weight around” and portrayed it as just the latest Western company to exploit the Chinese consumer.

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Apple patents iPhone with wraparound display

By The Associated Press - Friday, March 29, 2013 at 3:40 PM - 0 Comments

NEW YORK, N.Y. – Apple is seeking a patent for an iPhone that has a display that wraps around the edges of the device, expanding the viewable area and eliminating all physical buttons.

The patent application reveals that Apple has put some thought into a device that takes advantage of a new generation of displays, which don’t have to be flat and rigid like today’s liquid-crystal displays, or LCDs. At a trade show in January, chief competitor Samsung Electronics Co. showed off a prototype phone with a display that is bent around the edges, presenting “virtual buttons” for the user’s touch.

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A whole new Samsung Galaxy makes Apple Inc. uncomfortable

By Chris Sorensen - Thursday, March 21, 2013 at 1:00 PM - 0 Comments

Jason DeCrow/AP

With its five-inch screen, 13-megapixel camera and software that senses whether you’re looking at it, Samsung’s new Galaxy S4 is “an almost theatrically overblown phone, stuffed to the plastic casing with hardware and features,” according to PC Magazine.

It was not quite the revolutionary device many had hoped for, but it’s still making über-minimalist Apple Inc. uncharacteristically uncomfortable. In a Wall Street Journal interview, marketing chief Phil Schiller dismissed the S4 and other phones that run Google’s Android software as unworthy iPhone competitors, citing a subpar user experience.

He may well be right, but the comments came off looking petty and defensive, given that Apple’s stock has dropped by 35 per cent over the past six months, while Samsung’s has soared 11 per cent. Besides, it’s unlikely consumers will punish Samsung for offering them more for their money.

Hedge fund manager drops lawsuit against Apple as company’s stock hits new 52-week low

By The Canadian Press - Friday, March 1, 2013 at 3:18 PM - 0 Comments

SAN FRANCISCO – A disgruntled shareholder pressing Apple to create a new class of preferred stock has dropped a lawsuit that became a moot point after the iPhone and iPad maker changed the agenda at its annual meeting earlier this week.

Lawyers for hedge fund manager David Einhorn of Greenlight Capital notified U.S. District Judge Richard Sullivan in a letter sent Thursday that they no longer plan to pursue the lawsuit. Sullivan closed the case, which began three weeks ago in New York.

Einhorn had already achieved his goal last week when Sullivan issued a preliminary ruling blocking an Apple Inc. proposal that would have required shareholder approval before preferred stock could be issued. Apple withdrew the proposal from the agenda at its annual meeting held Wednesday.

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Apple CEO reassures shareholders about sagging stock, says board exploring cash options

By The Associated Press - Wednesday, February 27, 2013 at 3:42 PM - 0 Comments

CUPERTINO, Calif. – Apple CEO Tim Cook sought to assure shareholders Wednesday that the company is working on some “great stuff” that may help reverse a sharp decline in its stock price.

True to Apple’s secretive nature, Cook didn’t provide any further product details during the company’s annual shareholders meeting Wednesday. There has been speculation that Apple is working on an Internet-connected watch or TV, while one shareholder recommended that Apple develop a computerized bicycle. Cook, an avid bicyclist, chuckled at the suggestion, along with the rest of the audience.

Apple’s stock fell $5.20, or 1.2 per cent, to $443.77 in afternoon trading Wednesday.

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Judge hands rebel Apple shareholder a win

By The Associated Press - Saturday, February 23, 2013 at 6:54 AM - 0 Comments

NEW YORK, N.Y. – A federal judge is blocking Apple from conducting a shareholder vote on a package of governance proposals, handing a victory to a rebel investor who is trying to persuade the company to share more of its cash with its investors.

U.S. District Judge Richard Sullivan in New York ruled Friday that Apple Inc. was wrong to bundle four amendments to its corporate charter into one proposal for a vote at next Wednesday’s annual meeting. Shareholders should get to vote on the amendments separately, he said. Although the ruling was preliminary, before both sides had a chance to fully make their case, Sullivan said Apple was likely to lose. He granted dissident investors a preliminary injunction against Apple pending a full trial.

Apple will comply with Sullivan’s order and withdraw the issue from the agenda of next week’s meeting, said Steve Dowling, a spokesman for the Cupertino, Calif., company. It had appeared on the shareholder voting list as proposal No. 2.

“We are disappointed with the court’s ruling,” Dowling said. “Proposal No. 2 is part of our efforts to further enhance corporate governance and serve our shareholders’ best interests.”

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Dell Inc. and the PC industry’s innovation crisis

By Chris Sorensen - Tuesday, February 19, 2013 at 7:00 PM - 0 Comments

Tony Avelar/Getty Images

It’s a sure sign a company is in desperate straits when journalists go searching for answers from a former pitchman. In a recent interview with Bloomberg, Ben Curtis, the actor who played the “Dell dude” in computer-maker Dell Inc.’s 2000-era commercials (in which he would inform strangers “Dude, you’re getting a Dell”), suggested his troubled former employer could get a sorely needed boost if his character were resurrected. “Since that campaign ended, Dell has lost their personality,” Curtis said, adding that he, too, now uses an Apple Inc.-made laptop.

Dell’s problems won’t be so easily fixed. In a bid to speed up a badly needed transition from hardware manufacturer to provider of high-margin software and services, founder and CEO Michael Dell and private equity firm Silver Lake Partners are proposing a massive $24.4-billion leveraged buyout of Round Rock, a Texas-based company that once held the title of the world’s largest maker of personal computers. It’s just another reminder of how fast the technology industry moves. One day a company is the most powerful in Silicon Valley, with a soaring stock price; the next it’s contemplating moving away from the very business that made it a household name. (In Dell’s case, its outstanding shares, once worth nearly $60, are being purchased by its founder and Silver Lake for $13.65 apiece.)

Although desktop and laptops remain ubiquitous in homes, offices and schools, sales of PCs have slumped in recent years as consumers increasingly use smartphones and tablets. Worldwide PC shipments totalled 90 million units during the last three months of 2012, according to Gartner Research, a 4.9 per cent decline from the same period a year earlier. In Canada, the fall was even steeper—down nearly 14 per cent. “We’re approaching a saturation point in the market,” says Tim Brunt, an analyst at consulting firm IDC Canada. “There are multiple PCs in every household. Everybody’s got one, so now it’s just about buying replacements.”

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Apple iWatch? A really bad idea

By Peter Nowak - Wednesday, February 13, 2013 at 8:17 AM - 0 Comments

The latest silly Apple rumour has the company interested in selling a watch. Or, an iWatch, as it would probably go.

According to the New York Times, “investors would most likely embrace an iWatch, with some already saying that wearable computing could replace the smartphone over the next decade.”

It seems the Times, and perhaps the investors it references, have forgotten one simple fact: it’s a freakin’ watch.

Seriously, does anyone under 50 wear a watch anymore? And of those few souls who do, are any of them doing it for any other reason but to make a fashion statement (that statement, by the way, is “I’m a dinosaur.”)? Surely nobody wears a watch to actually tell time.

Analysts’ justifications for Apple – or anyone – to make a smart watch are collectively some of the dumbest ideas ever put forward:

• “The technology, including bendable glass, is ready for prime time.” Sure it is. You could also build a base on Mars, but that doesn’t mean it’s a good idea.
• “Such a watch could be used for phone calls, text messages, navigation and other smartphone-like functions.” Yup, but people won’t do that for the same reasons they avoid taking photos with their tablets (because it makes you look like a giant dork).
• “Wearable computers will be popular in the future.” Most likely, but just because 1950s science-fiction said it’ll happen on the wrist doesn’t mean that’s where they’ll end up.
• “Smart watches could be cheaper than a phone and therefore Apple’s best way into emerging markets.” Yeah, but so could… I dunno… a cheaper phone.

Honestly, where do they come up with this stuff?

Everyone seems to be forgetting one simple fact: Does anyone want to do any of that stuff on a postage-stamp-sized screen that sits on their wrist? And does anyone remember that actually wearing a watch isn’t all that comfortable? And while we’re at it, mightn’t we also remember that all of these functions are already performed quite ably by our smartphones, which have acres of screen size in comparison? And aren’t people already complaining about all the gadgets they have to carry?

Unless there’s a giant Dick Tracey revival some time in the next few years, I’m betting that any smart watch will result in one thing: iFailure.

Investor sues Apple over plan to eliminate preferred stock, wants more cash

By The Associated Press - Friday, February 8, 2013 at 8:37 AM - 0 Comments

NEW YORK, N.Y. – With its annual meeting looming and its stock on the decline, Apple is facing a rebellion from an influential investor who wants the company to stop stockpiling cash and give it to shareholders instead.

Greenlight Capital said Thursday that it is suing Apple in a New York federal court over the company’s proposal to make it more difficult for it to issue preferred stock. David Einhorn, who heads the investment fund, said the proposal would close down one avenue for Apple to reward shareholders with more cash.

Preferred stock is designed primarily as a way for companies to deliver a fixed income to shareholders. It differs from common stock, which generally doesn’t promise a regular flow of income but rather is a wager on a company’s long-term growth.

Apple is still the world’s most valuable company, but its stock has lost 35 per cent of its value since September, as it’s become obvious that its once-rapid growth has slowed down. The company is fabulously profitable, and Wall Street wants the company to share more of that money with its shareholders rather than tucking it away in low-yielding bank accounts.

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Apple blocks Java on Macs due to security threats

By The Associated Press - Thursday, January 31, 2013 at 2:26 PM - 0 Comments

NEW YORK, N.Y. – Mac computers have stopped running programs written using the Java programming language in their browsers, as Apple blocked it because of security problems.

Apple has previously blocked, then unblocked, the latest version of Java on the most recent versions of its Mac operating system. On Thursday, Apple also started blocking an older version of the Mac system, called Snow Leopard, from running Java 6, also an older version.

The U.S. Department of Homeland Security recommends disabling Java in Web browsers because it has provided pathways for hackers to take control of computers that visit a website rigged with malicious software. Oracle Corp., which owns Java, has issued updates that fix known vulnerabilities, but the DHS expects that there are more.

Oracle had no immediate comment on Apple’s action.

A bite out of Apple’s brand

By Chris Sorensen - Wednesday, January 30, 2013 at 11:22 AM - 0 Comments

Shares of Apple, formerly the world’s most valuable company, have lost more than a third of their value since September, tumbling from a high of US$705 to below US$450. Investors are concerned that Apple has suddenly lost its mojo just as competition facing its flagship product—the iPhone—mounts. Last week’s quarterly results, though not shabby by any stretch ($13.1 billion in profit on $54.5 billion in sales), did little to change anybody’s mind. Analysts were hoping to have their expectations surpassed. Instead they were barely met.

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Apple disappoints shareholders…and consumers

By James Cowan, Canadian Business - Thursday, January 24, 2013 at 1:45 PM - 0 Comments

Yesterday Apple posted the largest quarterly profit in the company’s history, and still somehow managed to disappoint investors. The stock was down nearly 11% this morning, with analysts citing myriad reasons for disappointment: slowing growth, lower-than-expected iPhone sales and the launch of the iPad Mini, which offers slimmer profit margins than its full-size compatriot.

Now, let’s be clear: Apple is not a company in crisis. It sold 47.8 million iPhones in the last quarter, a 78% improvement over the previous year, and sold 7.5 million more iPads over this Christmas season than it did the previous one. But any expectation the company could maintain this kind of skyrocketing growth indefinitely is—and always was—unrealistic. If Apple’s growth for the next five years matched what it’s done in the past five, the company’s revenue would hit $1.2 trillion, according to a recent report by A.M. Sacconaghi, an analyst at Bernstein Research—roughly equal to the GDP of Australia. Unless investors expect Apple to start printing its own currency and opening embassies, they need to accept an inevitable slowdown in growth.

Apple cannot afford to simply stare at its balance sheet and assume everything is fine. Research in Motion made a similar mistake, assuming their customers would stay loyal and their profits would stay healthy, even as warning signs mounted around them. Indeed, Apple is banking on the same consumer devotion to its products as RIM once did. “At Apple, it’s important to us that we make products that customers not just like, but love,” CEO Tim Cook told analysts yesterday.

That love for Apple is increasingly fickle. Consumers once enraptured with the iPhone can now cast their eyes to Samsung, or a fleet of other phones running the Android operating system. Apple hasn’t done much to maintain consumer loyalty with a widely derided revamp of iTunes and the complete failure of its in-house map application. As people live with Apple products, they develop grievances and gripes about their idiosyncrasies. “For glassy-eyed fanboys like me, the seamlessly magical Apple experience has frayed a little at the edges lately,” Canadian Business columnist Bruce Philp recently wrote.

Part of that fraying is the fault of the company, no doubt. But it also has to do with a general shift in the digital world. Apple has always made beautiful objects, but consumers now expect their gadgets to play well together. The new expectation is that we can, say, download a song on your phone, and then stream it to your stereo. Or store our photos in the cloud and view them on our tablets or TVs. This is a great idea, in theory, and one that Apple is clearly chasing. The company’s iCloud service, which now has 250 million users, is intended to provide this seamless experience. Anyone who’s used it, however, knows that the reality is far from it, requiring plenty of fiddling with menus and network settings. For the company that built its reputation on “It just works,” this is a serious problem.

Apple garnered love by selling fuss-free products. That’s a considerable challenge even when you’re building a single device. The challenge becomes exponentially greater with each phone, tablet and laptop added to the equation. And further, Apple has long relied on a “Halo effect,” where consumers enamoured with their iPhone decide they might love an iMac as well. But if those two devices don’t communicate, it creates a temptation to look elsewhere instead.

Apple’s short-term health seems assured. But unless it can make cloud computing and networking as elegant as it once made the iPhone, it won’t be feeling the love forever.

It’s confirmed: Apple is human after all

By Chris Sorensen - Wednesday, January 23, 2013 at 5:59 PM - 0 Comments

With concerns mounting about slowing growth and increased competition from rivals, Apple investors were hoping the iPhone—and iPad—maker would blow the doors off of its first quarter financial results. But while the Cupertino, Calif. company came close, it didn’t quite meet Wall Street’s expectations.

Apple reported earnings of $13.1 billion (U.S.) in the first quarter, about the same as what it earned during the same period last year. But investors were focused on Apple’s $54.5 billion in sales, which was less than the $54.9 billion that was expected by analysts. Another key figure—profit margin—also came in below the Street’s expectations at 38.6 per cent instead of 39.5 per cent, suggesting Apple’s ability to command a premium price for its products in the face of competition from rivals like Samsung is slipping faster than anticipated. Shares of Apple dropped below $500 in after-market trading. The stock has fallen by 26 per cent since September.

As for device sales, Apple said it sold 47.8 million iPhones, 22.9 million iPads, 4.1 million Macs and 12.7 million iPods in the quarter.

CEO Tim Cook reminded analysts on a conference call that Apple remains an impressive story, noting that it has so far sold well over half a billion devices running its mobile iOS platform. He also took on rumours that demand for the iPhone, which accounts for nearly half of all sales, was faltering amid reports it had cut orders for parts from some of its suppliers. “The supply chain is very complex,” Cook said, adding that it would be a mistake to try to interpret a single piece of data, even if it’s accurate, as being representative of Apple’s broader business. He also said initial iPhone 5 sales were constrained by Apple’s ability to make them quickly enough.

Apple is still an impressive company with impressive prospects. But investors have grown accustomed to being dazzled. Good simply isn’t good enough anymore.

Microsoft cements games lead, Apple joins the race

By Peter Nowak - Monday, January 14, 2013 at 4:38 PM - 0 Comments

Getty Images

It’s not much of a stretch to predict that we’re going to see some new video game consoles this year. It might be a little surprising, however, to suggest that Microsoft is going to jump to a commanding lead in this ongoing console war and that the battle may go from the current three players to four–at least for the time being.

The writing on the wall couldn’t be more obvious in regards to new consoles, at least from Microsoft and likely from Sony as well. Slowing console sales are one indicator, but perhaps the most telling hint is Microsoft’s first-party release schedule.

The company has typically rotated its two biggest franchises, Halo and Gears of War, over successive holiday periods, with the former coming one year and the latter the next. Yet this time around, Halo 4 saw its release this past September while Gears of War: Judgment is scheduled for a March, 2013 launch. The two biggest franchises released within months of each other? What’s going on?

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Maybe software patents can be fixed

By Jesse Brown - Friday, January 4, 2013 at 2:49 PM - 0 Comments

Q. What can we do to help?

A. You can die.

It’s not the friendliest tactic to take in a negotiation, nor the most likely to succeed. But it’s probably the only honest reply software developers can offer the United States Patent and Trademark Office, which has extended a conditional, possibly symbolic, olive branch to the tech community.

Tech law blog Groklaw reports that the United States Patent and Trademark Office is inviting developers to attend a duo of roundtable discussions on the future of software patents, to be held in New York and in the Silicon Valley next month. They’re calling it the “Software Partnership,” and the intention is to get developers’ input on how their broken software patent system can be fixed. Continue…

CEO Tim Cook gets modest 2012 compensation package after blowout 2011

By The Associated Press - Thursday, December 27, 2012 at 11:00 AM - 0 Comments

NEW YORK, N.Y. – Apple CEO Tim Cook got a relatively modest $4.2 million in pay for the latest fiscal year, after the company’s board set him up with stock now worth $510 million for taking the reins in 2011.

Cook’s pay for fiscal 2012, which ended in September, consisted of $1.4 million in salary, a bonus of $2.8 million, and $17,000 in company contributions to his 401(k) account and life insurance premiums, according to a filing.

Apple Inc.’s board saw no need to grant Cook additional shares in 2012 after the sign-on grant of 1 million shares in 2011. Half of those shares vest in 2016 and the other half in 2021.

Cook did vest into shares worth $140 million in 2012. Those shares were granted earlier, when he was chief operating officer.

Just in time for the holidays: apple to start selling new, slimmer iMacs on Friday

By The Associated Press - Tuesday, November 27, 2012 at 3:50 PM - 0 Comments

CUPERTINO, Calif. – Apple says the smaller version of its new, slimmed-down iMac desktop computers will go on sale Friday.

It will also start taking orders for the larger model, but the units won’t ship until next month.

The model with the 21.5-inch (54.6-centimetre) screen will cost $1,299 and up, depending on the configuration.

The model with a 27-inch (68.5-centimetre) screen will start at $1,799.

The iMac tacks the computer components to the back of a large LCD screen. The new models have no disk drive, helping make the edges one-fifth the thickness of the old model. They bulge considerably toward the middle of the back, however.

Apple revealed the new models a month ago.

What’s eating Apple?

By macleans.ca - Saturday, November 17, 2012 at 8:50 AM - 0 Comments

Noah Berger/Bloomberg/Getty Images

Apple’s new store in Silicon Valley may have cathedral ceilings and marble walls, but part of the business is rotting. On Nov. 7, the company’s stock price slid almost four per cent—now down more than 20 per cent from its peak of more than $700 a share in September. Yet some investors are sticking up for Apple, calling the stock a buy despite the troubles facing the world’s most valuable tech company.

At the end of October, Apple launched the iPad Mini to lacklustre reviews, and shortly after forced out its long-time chief of mobile software, Scott Forstall, after he refused to sign a public apology acknowledging troubles with the firm’s new maps service. While supply problems have plagued the newly released iPhone 5, rival Samsung’s Galaxy S III just nabbed the No. 1 spot in the smartphone market, widely considered Apple’s stronghold.

According to Bloomberg News, many analysts are sticking to their stock price targets (an average of $760), hoping Apple’s woes can be solved in the short-term. “There are real problems at Apple and then there are fake problems that aren’t long-term,” says Farhad Manjoo, a tech columnist for Slate who has covered Apple for the better part of a decade. Manjoo puts supply problems with the iPhone 5 in the latter category and says once the company figures out how to meet consumer demand, its bestselling product will boost share prices. Apple says it just launched three new products, which means manufacturing costs cut into short-term profits, and investment bank Oppenheimer & Co. chalked up share declines to an overpriced iPad Mini and recent management changes. Continue…

Will the Pfizer ruling stiffen up Canadian tech patents?

By Jesse Brown - Tuesday, November 13, 2012 at 1:24 PM - 0 Comments

If the topic of patent law fails to inspire much feeling in you, read Steven Levy’s exhaustive Wired feature, The Patent Problem—it will leave you apoplectic. Levy details just how far the U.S. patent system has strayed from its original purpose. Intended to incentivize invention, and included in the Constitution for that purpose, patents have mutated into anti-innovation weaponry.

The reasons are many. One is the evolution of patents into saleable assets. This was supposed to allow a poorly resourced inventor to sell his concept to a company with the cash to pull the trigger on it. Instead, companies began stockpiling patents without using them, in order to keep ideas away from rivals or to demand licensing fees from anyone who actually put the ideas on the market. Another huge problem was the Patent Office’s inability to evolve from the mechanical age to the digital age, which led them to rubber-stamping hundreds of thousands of software patents for generic or general concepts. Then came the birth of the Patent Troll, who banks on this incompetence by securing intentionally vague patents they never intend to use for anything but extortion (Levy focuses on an “inventor” who claims his patent covers every eCommerce site on the Web, whose legal threats have generated millions in settlements.) Finally, there’s the patent arms-race between mega-corporations, a battle which sees patents not as ideas to turn into products, but as munitions in a legal arsenal. The intent was to prevent costly legal battles—you sue me, and I’ll sue you. But this pax has unravelled of late, as evidenced by a recent slew of mega-lawsuits. It’s a ludicrous waste of resources that has resulted in Apple and Google both spending more money on patents than on R&D. The result, writes Levy, is “a disastrous environment for innovation” wherein “it’s practically impossible to build anything without violating a patent…and risking a multimillion-dollar lawsuit”.

While our patent regime differs from America’s, there’s a high degree of standardization among G8 countries when it comes to intellectual property law, and Canadian inventors face the same hurdles Levy describes. Still, global awareness of (and disgust towards) the broken patent system is growing. In the U.S. this is taking the form of measured and slow-moving legislative efforts. Here in Canada, a landmark Supreme Court ruling could change everything.

By now you’ve likely heard of the decision against drug-maker Pfizer. Yes, you’ll soon be able to get cheap generic penis pills in Canada, but the implications could be far greater. Pfizer’s patent was deemed invalid because it didn’t adequately describe what Viagra is. Mention of the active chemical, Sildenafil, was buried in the patent. The Court ruled that in order to protect an invention, a patent must actually disclose what that invention is. Beyond common sense, this is so because of the “patent bargain”:  an inventor tells the world how to make something in exchange for a time-limited monopoly on that invention. Pfizer may have been trying to hide their innovation, or they may have been trying to define their patent as widely as possible in order to block rivals from selling a similar product made in a different way. Whatever their motive, a bold new precedent has been set that could radically shake-up technology patents.

From now on, any patent that fails to adequately describe the invention it seeks to protect is vulnerable. That’s a threat to thousands of software patents. As lawyer Eugene Meehan, the former executive legal officer at the Supreme Court, told the Vancouver Sun, “the decision is a legal earthquake in the patent world – it’s like hurricane Sandy blew through the Patent Act.”

 Follow Jesse on Twitter @JesseBrown