Yet ironically, one of the earliest beneficiaries of the Vodafone judgement has been the tax department itself. In a series of at least three separate decisions, the Authority for Advance Rulings (AAR), a judicial body which rules on the taxes applicable in cross-border deals or transactions, has used the Vodafone case to rule in favour of the tax department.
Taxpayers use the AAR to get clarity (in terms of taxes due) not on transactions they have already done, but on a deal they want to do in future. The AAR then rules on the kinds of taxes they can be expected to pay on such a deal. Such an 'advance' ruling is intended to help taxpayers avoid a long-drawn and costly battle with the tax department after the deal goes through.
All three AAR rulings were about a specific type of contract widely used in turnkey infrastructure projects, where a supplier is responsible not just for delivering goods, but also installing and testing the goods on site where the buyer wants it. But the judgements have wider implications.
Signalling a 'Shift'?
In one of the cases, Alstom Transport, a French company was part of a consortium to manufacture, supply, test and commission a signalling and communication system for trains for the Bangalore Metro.
Alstom pointed out to AAR that since the sale of the systems (and the profits made) were offshore or outside India, they couldn't be taxed on that part of the contract at least, by the Indian tax department. To back them up, they relied on what till the Vodafone case came along, had been a fairly well-established precedent. Courts had ruled that contracts such as the one that the Alstom consortium signed could be 'dissected' into separate bits.
The parts which concerned transactions outside India were not within the ambit of the Indian tax department. The ones that took place within India, such as the payments to the consortium for installing and testing the system, could be taxed here. And because the supply leg is usually a very lucrative part of the overall turnkey contract, this was a big plus point for suppliers to such projects.
Vodafone Upsets the Applecart
But the Vodafone case has upset this consensus. The tax department in that case argued that the only reason the Cayman Islands Company had any value at all, was because it was the ultimate owner of Hutch's Indian telecom business. Therefore, irrespective of where the company itself was located, profits on its sale should be taxed in India.
What the tax department argued in effect, was that you had to 'look through' what seemed to be ostensibly a sale of shares in a Cayman Islands company to another foreign company, and drill down to the real reason for that sale - the deal to buy the Indian telecom business of Hutch. The real 'substance' of the Vodafone-Hutch deal was in this intention to buy the telecom business. The sale of shares was merely a means to an end - the legal 'form' of the deal.
Wall Street Beat: Bad news rolls in for tech - PC Advisor
With market forecasts looking dour and companies including Nokia and Texas Instruments trimming expectations this week, concerns for the tech sector are mounting.
The causes for anxiety are the usual culprits, including weak growth in Europe and Asia and the possibility that debt-laden Greece or Spain may leave the euro zone.
IDC's latest Worldwide Software Market Forecaster, released Thursday, offered a disappointing analysis for software, which is usually considered to be a bright spot for tech. While 2011 delivered nearly double-digit growth in the worldwide software market, the highest growth rate since the 2008 implosion of the banking sector, the future looks bleaker, IDC said.
"IDC expects the overall software market to return to more conservative growth in the years to come," said Patrick Melgarejo, director of IDC's software trackers, in the report. "The major driver behind this decelerating growth is the forecast for close to flat performance in EMEA, due to the economic difficulties in that region."
The survey monitors more than 1,000 software vendors in 49 countries. IDC said the fastest growing software applications are enterprise social software, virtual machine software and team collaborative applications.
In 2011, the Asia/Pacific and Japan area experienced the highest growth rate of all regions, as it has over the past three years, expanding from 15 percent share in 2008 to 16.5 percent. However, the region is expect to slow down and more closely match growth in other regions in the next year or so.
The good news for the Western Hemisphere is that North America and Latin America are together expected to maintain a stable market share of almost 53 percent over the next several years.
IDC also had some troubling news for the storage market. IDC's Worldwide Storage Software QView, released Monday, showed that worldwide storage software market revenue during the first quarter this year increased 3.3 percent year over year to US$3.5 billion. However, the growth rate has slowed to 2009 levels, IDC said.
"The first quarter saw decidedly mixed results," said Eric Sheppard, research director of Storage Software at IDC, in the report. "Incremental spending attributable to recent product refreshes have run their course within some functional markets, such as storage infrastructure software. "
On the hardware and components side of tech, TI and Nokia gave fresh cause for worry. TI on Monday narrowed its expected ranges for revenue and earnings per share (EPS). The top end of TI's forecast for revenue is now $3.42 billion compared with the prior high end estimate of $3.48 billion. For EPS, TI brought down the top end of its forecast from $0.38 to $0.36.
Far worse, however, was Nokia's announcement Thursday that it will lay off 10,000 workers by the end of next year to cut annual operating costs by €1.6 billion (US$2 billion). In its last full financial report in April, Nokia said that first quarter sales were €7.4 billion, down 29 percent year-on-year, making a net loss of €929 million. It grappled with poor sales of low-cost phones and its Symbian-based phones, while the share of its new Windows Phone sales was still small.
On Friday, Moody's ratings agency downgraded Nokia's debt grade to junk status, noting greater-than-expected pressure on the company's earnings.
Nokia's shares on the New York Stock Exchange are in the gutter for a company of its size. However the market appeared to react favorably to plans to resize the company, with investors pushing up its share price by $0.13 in late afternoon trading, to $2.48.
Major exchanges and indexes in the U.S. as well as tech stocks rose in late afternoon trading despite fears that Greece's elections on Sunday could put into power politicians who will call for an exit from the euro zone, leading to a collapse of the monetary union. Some analysts noted that investors may have been heartened by media reports that central banks have been working hard to prepare to take coordinated, protective action in response to the elections.
In late afternoon trading, Nasdaq computer stocks were up 1.39 percent in aggregate. However, they are still about 10 percent lower than their high point of the year. Meanwhile, tech investors are hoping for Red Hat and Oracle to provide some good news on the enterprise front when they release their quarterly earnings reports next week.
Samsung reveals three 'top secret' Galaxy S3 prototypes - PC Advisor
Samsung had to keep its Galaxy S3 smartphone as secret as the Apple iPhone it challenges, according to a new blog splashing the secrets on the new Android phone’s many prototypes.
Samsung Galaxy S3 prototype secrets
In the Samsung Tomorrow blog it’s revealed that the engineers worked on multiple prototypes of the Galaxy S3 to “avoid any design leaks”.
Samsung Galaxy S3 video review
The Galaxy S3 – which features a 4.8-inch super AMOLED screen (with a resolution of 1,280 by 720 pixels), a quad-core processor, 1GB of RAM, and an 8Mp camera – was launched in May.
Each of the three S III prototypes were made like final products, and “continuously changing” to keep things top secret. Engineers had to repeat the same process for all three types, the Samsung blog reveals.
“I was in charge of the antenna,” said Senior Engineer BeoungSun Lee (H/W R&D).
“Generally, we manufacture the antenna based on the final design and request for authorization. However, for security reasons, we had to make the antenna over and over.
“We had to come up with a new antenna every time the new design came out. To be honest, it was quite tiring and frustrating”.
WooSun Yoon(Principal Engineer, H/W R&D) agreed. “There were many prototypes and yes, it takes more time and effort to make more working prototypes.
“It’s even more difficult when you’re sending those to different places for testing and yet at the same time hiding it from everyone. Time constraints pushed me to take a lot of helicopter rides back and forth.
“I’m glad we were able to keep the new Galaxy S III under wraps to the end, but I can’t stress enough how hard it was.”
Principal Engineer WooSun Yoon (H/W R&D) also told how disguises were used.
“We had to make three types of the Galaxy S3 to prevent the design from leaking.
“And on top of that, whenever any of these had to go out for testing, we put them inside ‘dummy boxes’, which are cases that hide the design of the device, to disguise it.
“Even if people, inside or out of the campus, saw the device, I doubt they would have known what it was.”
More and more Samsung Galaxy S3 secrets are sneaking out now that the smartphone is on sale. The Wordpress blog Inside Sprint Now last week leaked 15 Samsung Galaxy S III training videos.
The new Android smartphone was launched in May in the UK. Samsung said earlier this month that the Galaxy S III will be available in the US starting this month from five carriers, including AT&T, Sprint, T-Mobile, Verizon Wireless and US Cellular.
Vodafone holds for Orbis, while Spain awaits Willie Walsh's arrival - The Guardian
Vodafone has a history of getting its own way in takeovers – so the form book suggests we should back the mobile phone giant to complete its £1.04bn offer for Cable & Wireless Worldwide when shareholders vote on Monday. Still, there remains a small chance of a poor reception for the 38p-a-share bid from some fund manager called Orbis.
For reasons best known to itself, Orbis has been building a 19% stake in CWW – more than doubling its stake at an average of 53p a share over the past two years. Its clients will take a painful hit if the current offer goes through, but at least the chunky holding means it could conjure up some interference, as Vodafone needs 75% of the vote.
Orbis insists it will only decide which way to jump just before the meeting, and while it might be a long shot, it could delay a merger that will make Vodafone the UK's second largest telecoms group behind BT.
The deal also potentially allows Voda to use CWW's heroic losses to make tax savings – which would be a thorny area. Last week the mobile operator was busily penning letters trumpeting a "vindication" from the National Audit Office in regard to its infamous £1.25bn settlement with HM Treasury. That must have been pleasing. It can now address the PR damage by writing letters, not cheques.
Walsh faces strong headwinds in Madrid
This is your captain speaking. We will shortly be arriving in Madrid, where we are anticipating a bumpy landing. Please fasten your seatbelts.
That is essentially the scenario confronting International Airlines Group boss Willie Walsh, as the man piloting the British Airways and Iberia brands prepares to touch down in Spain for this week's annual general meeting.
Usually when you hear a London-listed company is meeting shareholders outside London, you assume the board is trying to duck something – and that would be the knee-jerk reaction here. Two years ago, at the last British Airways annual meeting before it merged with Iberia, Walsh was heckled by flight attendants and subjected to a barrage of hostile questions. Two seated rows of cabin crew members even mocked Walsh by laughing sarcastically when the boss said the airline was "not in dispute with staff" and in one sharp exchange a crew member stated: "I am not a child, Mr Walsh."
So is he wriggling out of a dogfight by decamping to Madrid? Don't be silly. Walsh's scrap del día is with his Spanish pilots. Tactfully, he calls their contracts "frankly outrageous".
James steps out on the playing fields of Dixons
We've heard very little about Sebastian James, the new boss of electricals retailer Dixons, since the publication of that Bullingdon Club photograph where he sat perched at the feet of the future prime minister.
Their relative positions have altered little since, but this week gives the son of Kent landowner Lord Northbourne (and descendant of Victorian politician Sir Walter James) a chance to enlighten the City on how he's finding flogging flatscreen TVs.
James, who is also an Eton contemporary of David Cameron's, took the controls at the retailer in February after Apple poached boss John Browett. Thursday's full-year results will be the new boy's debut outing and investors will be interested in how he is getting on, not least because retail-watchers reckon he will eschew City tradition and not trash his predecessor.
"We expect him to give an upbeat view of the company's prospects," predicts Philip Dorgan of broker Panmure. "This is worth mentioning, because many new chief executives like to lower expectations in the hope that they will beat them and subsequently look like heroes."
Still, don't expect such munificence if prospects turn worse. Old Etonians don't always retain their charm when threatened.
Seam of trouble for UK Coal
"If miners can increase production and cut costs, then the mine should have life. If they can't, we are looking at closure."
That may sound like a 1980s speech by Sir Ian MacGregor, the former boss of the former National Coal Board, but the comments are far more contemporary: they came in March from UK Coal, which was talking about its struggling Daw Mill pit in Warwickshire.
Britain's largest coal group needs to find more cuts – despite just announcing its first profit in four years – and these issues are likely to be raised at the firm's annual general meeting this week (along with the usual corporate governance stuff). Pirc is recommending investors oppose the re-election of non-exec Steven Underwood (it questions his independence) as well as voting against the remuneration report.
Not so long ago, a show of hands at the pits could bring down a government or trigger a power cut. That's changed: now it's miners fretting the lights will go out.
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