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Apple Says Profits Were Flat, Citing Slump in China

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Apple said on Tuesday that profits were flat and revenues were down in its most recent quarter, indicating a difficult road ahead for a company that five months ago became the first American firm to be valued above $1 trillion.

The disappointing financial performance had been expected since Jan. 2, when Apple, for the first time in 16 years, revised its forecast for the quarter because of an economic slowdown in China and diminishing demand for new iPhones.

Now, after years of expansion and record-setting profits, Apple appears to be entering a period of vulnerability. While it has had some success with new products like the Apple Watch, the company has not found another product with the global impact of the iPhone, which was introduced more than a decade ago. Apple is also uniquely vulnerable to slowing consumer demand in China, as well as potential tariffs on Chinese-made products.

Apple’s stock price is down a third since its peak last summer, and now it is worth less than several of its longtime rivals in the tech industry.

Apple could face more financial pressure if the Trump administration places tariffs on phones made in China — something President Trump has threatened to do. The bulk of Apple’s products are made in Chinese factories.

There are also new concerns about a security flaw in the iPhone. On Monday, Apple customers said an iPhone user could call someone else who had an iPhone and listen in on that person’s conversations through the device’s microphone — even if the recipient did not answer the call. The problem was the result of a bug involving Apple’s FaceTime app. The company promised to have a fix by the end of the week.

Apple’s total revenue for the quarter was $84.3 billion, a 5 percent drop from a year earlier and in line with the revised forecast earlier this month.

Sales of iPhones, following a global trend for smartphones, have been leveling off for several years. Their revenue was $51.98 billion, a 15 percent drop from a year earlier. It’s harder now to offer more specifics on iPhone sales because Apple recently stopped disclosing how many units it sells each quarter.

Luca Maestri, Apple’s chief financial officer, said in an interview that sales had slumped largely because current iPhone owners were waiting longer to upgrade their devices, a trend that has continued into the current quarter. He blamed fewer subsidies from wireless carriers, a strengthening United States dollar and cheaper battery upgrades that consumers have used to extend the lives of their old phones.

Apple has attributed some of its issues in China to a trade war with the United States. And there is concern that some Chinese customers are shying away from Apple products out of national pride, particularly since the authorities in the United States brought charges against the Chinese telecom giant Huawei and its chief financial officer, Meng Wanzhou. Prosecutors cited a decade-long attempt to steal trade secrets, obstruct a criminal investigation and evade economic sanctions on Iran.

“We did not foresee the magnitude of the economic deceleration, particularly in greater China,” Timothy D. Cook, Apple’s chief executive, said this month.

But some data suggest Apple faces more fundamental problems with its business in China. Chinese consumers appear to be opting for less expensive but similar smartphones from Chinese makers, particularly Huawei. Some of Apple’s latest phones top $1,000, far above the typical cost for its Chinese competitors.

Total sales in the region that includes China were down 25 percent in the fourth quarter to $13.17 billion. Outside China, revenues increased slightly.

“We’ve actually seen the economic situation in China continue to deteriorate over the course of the quarter,” Mr. Maestri said. “From mid-November onwards, we’ve seen a deceleration of economic activity in China.”

But he added that Apple had recovered some business by cutting prices in China for the iPhone XR, the lowest-priced new iPhone, to offset the strengthening dollar. Apple declined to disclose the exact size of the price cut.

Mr. Cook said in a call with financial analysts that he believed the iPhone’s high price had hurt sales in emerging markets, and that Apple had dropped prices in a number of them.

Apple made up for tepid iPhone sales in the quarter with 19 percent revenue growth in other areas. The wearables category, which includes the Apple Watch and AirPods headphones, led the way with a 33 percent increase to $7.3 billion.

Apple’s earnings per share were $4.18 in the quarter, beating analysts’ expectations by a penny. Apple’s overall profit was down 0.5 percent to $19.97 billion.

Apple’s struggles appear to be continuing. The company said it expected between $55 billion and $59 billion in revenue in the current quarter, below analysts’ expectations for $59 billion.

Apple’s share price was up more than 5 percent in after-hours trading after its results were announced on Tuesday.

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Wedding attack and tech: How OpenText’s investigations service beats the traditional approach

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At its heart, an investigation is a hunt for relevant facts in order to tell a story — a story that drives strategies for organizations, including law firms.

Tracy Drynan, head of OpenText Recon Investigations — a seamless end-to-end service that helps companies and law firms find evidence for all types of investigations including internal investigations, litigation assessments, compliance and regulatory investigations, c-suite vetting and more — says these stories are a more powerful tool than most people think.

The team led by Drynan arms both in-house and external counsel with the information needed to guide their corporate and outside lawyers with the information needed to guide their clients: an investigation empowers them. What differentiates OpenText Recon is the speed with which the team utilizes specialized tools and workflows to efficiently locate evidence. This approach gains insights into patterns, gaps and relationships in a fraction of the cost of a traditional eDiscovery review, and more quickly gathers the relevant facts to create that critical story.

“Whether it be litigation or a regulatory investigation or an internal audit, often time is of the essence,” Drynan says. “Being able to make decisions that affect your bottom line, your liability, your risks which ultimately challenge your resources, even public opinion, is critical.”

Too often, an archaic model is applied to investigations — one derived when we still existed in a paper society — that analyzes all available information but doesn’t actively hunt for relevant facts, and that produces a disconnect. An efficient model does not need to analyze every piece of information.

“It’s flawed for this reason,” Drynan says. “When you review a set of information, even when you apply advanced analytics and information retrieval science, it is still at the end bucketed for a team to analyze it contiguously. In a way, we are still following the pre-electronic paradigm — we are reviewing almost paper documents one by one, and that unfortunately is handicapping both the talent and the technology in the hunt for the facts.”

While lawyers may make a living hunting facts and building narratives, Drynan would argue their approach could be improved and points out that many of the companies hired by firms to help out during an investigation still apply that outdated model. OpenText Recon breaks that pattern and approaches the hunt differently — they don’t compartmentalize anything, which means the team can identify patterns more easily. Those patterns become the clues, which become the facts, that become the story that allow lawyers to make those critical decisions. The result is not a stack of documents, but a more nuanced report outlining the important facts to analyze.

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Canada takes aim at Netflix, Airbnb in $6.5B big-tech tax plan

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Canada’s federal government is planning to force foreign-based technology firms such as Netflix Inc. and Airbnb Inc. to charge their users a sales tax in a move aimed at boosting the government’s coffers by as much as $6.5 billion over the next five years. 

The new taxation plans, outlined in the government’s Fall Economic Statement, attempt to level the playing field between Canadian companies and foreign-based digital corporations that were largely exempt from paying federal sales taxes. Some provinces — such as Saskatchewan, British Columbia, and Quebec — introduced taxes on streaming services like Netflix earlier this year. 

The government announced Monday that any foreign-based company selling digital products or services to consumers in Canada will be required to collect and remit the Goods and Services Tax or Harmonized Sales Tax. The new tax changes are proposed to begin on July 1, 2021. 

“Canadians want a tax system that is fair, where everyone pays their fair share, so the government has the resources it needs to invest in people and keep our economy strong. That is why we are moving ahead with implementing GST/HST on multinational digital giants and limiting stock option deductions in the largest companies,” said Finance Minister Chrystia Freeland, in prepared remarks. 

“And Canada will act unilaterally, if necessary … to apply a tax on large multinational digital corporations, so they pay their fair share just like any other company operating in Canada.”

Those taxes will include any sales on products or services made through digital marketplace platforms, sales to Canadians of goods that are located in Canadian fulfillment warehouses, as well as any companies whose platforms help to facilitate short-term rental accommodations in Canada. 

However, the new taxation moves wouldn’t see streaming services such as Netflix, Amazon.com Inc.’s Prime Video, Walt Disney Co.’s Disney+, and Spotify Technology SA meet certain Canadian-content requirements, something the Canadian Radio-television and Telecommunications Commission​ recommended be adopted rather than introduce new tax measures in a wide-ranging report released earlier this year. 

The CRTC estimates that those streaming services record annual revenue of roughly $5 billion, according to its most recent financial data. The federal broadcast regulator said in January that Ottawa should require foreign streaming services to invest in local programming rather than “digital taxes” that would likely get passed down to consumers. 

“It is more appropriate to establish a regime that requires such online streaming services that benefit from operating in Canada to invest in Canadian programming that they believe will attract and appeal to Canadians,” the report said. 

Ottawa will also consider new corporate-level taxes for foreign-owned digital corporations and is working with the Organisation for Economic Co-operation and Development to develop a framework it expects to provide further details on in the next budget. It expects the new measure will result in $3.4 billion in new tax revenue over the next five years once it is introduced sometime in 2022. 

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RevoluGROUP Canada Inc. RevoluPAY To Pursue Dubai Financial Services Authority PSP License

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VANCOUVER, British Columbia(GLOBE NEWSWIRE) — RevoluGROUP Canada Inc. (TSX-V: REVO), (Frankfurt: IJA2) (the “Company”) is pleased to announce that it has dispatched Company advisor Erik A. Lara Riveros to pursue the petition of a Payment Service Provider (“PSP”) Money Service Business License in the Dubai International Financial Centre (“DIFC”) from the Dubai Financial Services Authority.

Corporate Rational For a PSP License in Dubai

In May 2020, RevoluPAY was granted the European PSD2 license. In September, RevoluPAY received Pan-European passporting approval to operate in 27 E.U. countries. The Company has further expanded its international open banking reach through definitive agreements (“DA”) with BBVA, Flutterwave, and Thunes. Additionally, via direct PSD2 SEPA passporting, the Company added sixty-eight countries and territories to its financial operations roster. In November, the Company submitted petitions for both the analogous United States MSB licenses and the Canadian FINTRAC license. The MEASA region of the Middle East, Africa, and South Asia is a significant financial hub that necessitates exposure for both financial operations and a strategic base for the region’s operations. The Company considers the DIFC an excellent regional hub, having introduced robust legislation for payment services providers (“PSP”) like RevoluPAY.

Furthermore, DIFC conveniently fills the timezone gap for a global financial center between London and New York’s leading financial centers in the West and Hong Kong and Tokyo in the East. Company advisor Erik A. Lara Riveros is duly accredited with the Dubai Financial Services Authority, which should aid the Company’s plans to obtain the Dubai PSP license and establish a corporate financial hub in the region. The Company has diligently prepared all required documentation, and Mr. Lara Riveros arrives in Dubai on the 4th of December 2020 to initiate the license petition process. The global operations of RevoluPAY expect to benefit from the multi timezone capability garnered from a supplementary and PSP licensed subsidiary domiciled in the MEASA region.

License Sought in Dubai

The Company intends to pursue the Category 3D license, which covers the following activities, “Providing or Operating a Payment Account, executing Payment Transactions or Issuing Payment Instruments, including creating and maintaining accounts for executing payment transactions, issuance of personalized sets of procedures agreed upon by the users and the provider, for initiation or execution of payment instructions.”

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