Earlier this week, Apple (AAPL) CEO Tim Cook went to Washington DC to discuss the company's use of tax loopholes. It seemed like an outstanding opportunity for political leaders to discuss tax reform with the head of the most well-capitalized company in the world. Instead most of the Senators chose to attack Cook for, in the words of Sen. John McCain, violating the spirit of corporate tax laws.
Naturally Cook made the Senators look out-of-touch with reality. Americans have a natural distrust of the rich but the entire country was founded as a mass protest against "taxation without representation." Despising taxes is part of our national DNA. The only conceivable way Tim Cook and Apple could appear sympathetic is being attacked by Senate for not maximizing their tax bill.
By the end of the ordeal the Senators were falling all over themselves praising Cook, Apple and iPhones. Ironically it was Apple's worst moment. Having a 78-year-old man swooning over your newest product isn't the kind of PR Apple needs. Making matters worse, Cook's command of arcane international tax code showed him at his very best and worst. He came across as an incredibly capable CPA running a company in desperate need of vision.
Todd Schoenberger, managing partner at LandColt Capital, isn't sweating it. In his view, the testimony reignites the bullish case for Apple.
"What it brought to the attention of everybody is how much money this company is actually saving and how much money they have in cash," he states in the attached video. "That's why you want to be long this stock."
So Apple is swimming in lucre, the argument goes, who cares what their tax rate is?
The answer is no one except maybe Senator McCain and a bunch of Irish politicians. What investors do care about is whether or not Cook's Apple intends on releasing something fresh in the foreseeable future. Samsung (SSNLF) is constantly throwing Galaxy products on the market and Microsoft (MSFT) of all organizations, seems to be well on the way to producing the groundbreaking television platform Apple has been hinting at for years.
Tim Cook is brilliant but he seems to lack vision. Apple tried putting an MBA-type in the corner office when it ousted Steve Jobs in favor of a Pepsi executive. It ended poorly. Apple needs a visionary at the helm to succeed. What they have now is a steward. Americans will always hate taxes and love the Next Big Thing. Unless Apple plans to create an iTax program that allows us to stash money abroad, it would be better for investors if Apple concentrated on innovation of products more than preservation of capital gains.