Zonkey. Web. Happy.

It’s not just Western technology giants that are being targeted by the Indian government, now local IT services behemoth Infosys has been forced to challenge a Rs.5.77 billion (£68.7m) tax demand by the authorities.

India’s second biggest outsourcer was hit with the tax bill for the 2009-10 year last month.

The demand relates to “tax benefits on income from onsite software development and revenue from SEZ [special economic zones in India], according to a statement sent to The Reg.

The firm is claiming that the tax demand ignores a clarification made by the authorities back in January, and added that it “is in the process of filing an appeal before the Commissioner of Income Tax”.

Infosys is already facing a hefty Rs11.8bn (£140m) bill for the four fiscal years preceding 2009-10.

The Indian government’s beef appears to be with the value of deductions the firm made. Expenses in foreign currency were apparently reduced from export turnover, but not reduced from total turnover, meaning Infosys effectively claimed too much in deductions from its tax bill over the period.

The company is by no means alone in being targeted by the tax authorities in India.

Nokia received a visit from the tax man back in January this year and was slapped with a Rs.13,000 crore (£1.5bn) bill for tax violations and transfer pricing irregularities.

Meanwhile, Google, which is under the microscrope in various countries around the world, received a Rs76 crore (£8.7m) fine in November last year for allegedly misleading the Indian government and violating accounting rules.

Vodafone has also been locked in a protracted battle with the authorities over £1.4bn worth of capital gains tax it is said to owe on its acquisition of Hutchison Essar back in 2007. ®

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/21/infosys_hit_with_india_tax_bill/

Storage array biz NetApp has laid off 300 people at a research and development centre in India and “hundreds” more in the US, according to industry sources.

The Times of India reports that anonymous insiders at NetApp’s Bangalore operation – which is the company’s largest RD facility outside of the US – have been given their marching orders. NetApp India declined to comment on the layoffs.

Two American sources also confirmed to The Register that hundreds of people were laid off in the US on Friday, supporting our article on Wednesday which reported that NetApp was preparing to lay off up to 1,300 people.

A NetApp spokesperson told El Reg at the time: “NetApp is in its fiscal fourth quarter 2013 quiet period and cannot provide comment at this time.”

Investment bank Piper Jaffray privately warned its clients last week that NetApp is preparing to slash 10 per cent of its global workforce.

Looking across the industry, Dell’s storage business reported in its latest quarter that its revenue was down ten per cent to $424m from $473m a year ago, suggesting the market is weakening. Storage giant EMC is laying off 1,800 staff in response to a downturn in profitability with, El Reg understands, mid-range VNX sales hit hardest.

Meanwhile, storage networking vendor and fellow NetApp rival Brocade’s latest results show a downturn in Fibre Channel SAN networking gear.

From where El Reg‘s storage desk is sitting, we see the mid-range networked storage market facing a general downturn with suppliers scrapping it out. A strengthened HP StoreServ (3PAR) product line and IBM Storwize arrays could well tempt new customers across, leaving EMC, Dell and most likely NetApp facing uphill sales battles.

NetApp reports its fourth quarter and full 2013 fiscal year results on 21 May. It is facing an attack by Elliott Management, an activist investor seeking board-level changes so that NetApp can deliver more value to shareholders via stock repurchase, dividends or even, it’s speculated, by a sale of the company. But this canard has been floated often before and – previously – has come to nothing. ®

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/20/netapp_india_300/

Yahoo! will hold a “product-related news event” this upcoming Monday with CEO Marissa Mayer in attendance to “share something special.”

Did you get your invitation yet?

That’s the word first tweeted by CNBC on Friday afternoon. Yahoo! later confirmed that it was holding a 5pm press event in New York City – “by invitation only,” of course.

We can only speculate what the event will reveal, but we here at The Reg wouldn’t be at all surprised if it had something to do with the recent Tumblr rumblings that are hypothesizing that Mayer Co. are prepared to shell out a billion clams for the customizable social-networking site that lets its users “Post text, photos, quotes, links, music, and videos from your browser, phone, desktop, email or wherever you happen to be.”

We sincerely doubt that the event will have anything to do with a Mexican appeals court, a failed buyout of French startup Dailymotion, original TV shows, another Dropbox announcement, more Mayer musings on the “fourth wave” of the internet, or the axing of more products – although something Summly-related is an outside possiblity.

But a hastily called presser in the Big Apple, attended by the CEO herself? That sounds more like a billion-dollar event. ®

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/17/monday_yahoo_event_in_new_york_city/

The Fair Labor Association’s (FLA’s) latest report on workers at Chinese manufacturer Foxconn, Apple’s preferred source for many iThings, has found many staff are still working longer hours than is allowed under Chinese law.

The report (PDF) is based on audits of Foxconn plants in Guanlan, Longhua and Chengdu. The report was compiled after visits to those plants between January 15th and 25th, 2013, and says the methodology for its assessments meant “ assessors also conducted a walk-through of the facilities, examined records, and held interviews with management and workers.”

Assessors found many improvements to working conditions, including “enforcement of ergonomic breaks, changing the design of workers’ equipment to guard against repetitive stress injuries, updating of maintenance policies to ensure equipment is working properly, and testing of emergency protective equipment like eyewashes and sprinklers.”

Work on extra toilets and fire escapes has commenced, and should be completed by August 2013.

An insight into the nature of Chinese Communism can also be found in the report’s “notable increases in the participation of workers in union committees and a corresponding decline in management participation in such committees”. And there we were thinking that a Communist country would have lots of workers on union committees! Silly us.

Use of interns has also fallen to a point at which the FLA is happy Foxconn has met targets set last year.

Long working hours are still a problem. Apple and Foxconn have said they’ll aim for forty hour weeks, plus up to nine hours overtime. The FLA report says many workers are still clocking up 60 hour weeks and labels working hours “the most challenging action item” on its list of things for Foxconn to do.

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/17/apple_labor_conditions_report/

Technology startups are not quite the growth engine they’re assumed to be, according to a 30-year study by economic think-tank the Ewing Marion Kauffman Foundation.

The Kaufmann Foundation, to give the organisation its commonly-used short name, happily describes itself as “the world’s largest foundation devoted to entrepreneurship.”

The study, titled “The Constant: Companies That Matter” (PDF) considers companies with the following three qualities:

1. They must be scalable. They must, in other words, be able to grow to at least $100 million in revenues, and ideally, much larger.
2. They must be disproportionate creators of jobs. They must be able to generate jobs quickly and broadly, even if they may not generate jobs in line with their revenue growth.
3. They must be disproportionate creators of wealth. Both directly,through profits, salaries, and profit-sharing, and indirectly, through equity, options, and perhaps a public listing, they must put wealth back in the hands of the company’s ecosystem.

The study says it’s worth considering such companies because they are constantly emerging and are therefore worthy of study. That such companies also “make up more than 95 percent of the market capitalization of major stock market indices” , “produce more than 90 percent of the returns for the venture capital industry” and through their acquisitive ways have become ”an important source of liquidity and wealth for other entrepreneurs” also makes them worthy of study.

Research for the study saw its author trawl through US financial data dating back to 1980, with any company that achieved $100m in sales included. That methodology produced a finding that “on average, fifteen to twenty technology companies founded per year in the United States … one day get to $100 million in revenues.” About four of those are founded in California, with that State’s share of startups that matter falling over time.

The report also says that while technology companies’ produce lots of “companies that matter”, but makes a point of waving a sharp object in the direction of the tech startup bubble by pointing out that “Unsurprisingly, but contrary to some rhetoric, while information technology is important, it is not the most important contributor in percentage terms to the $100-million firms in the United States on a founding cohort basis.

That honour goes “… in percentage terms, [to] consumer discretionary and industrials.” The former category includes cars, entertainment and clothes. Industrials are concerned with construction, manufacturing and services. The sectors produce so many companies that matter, the study says, because they are the largest sectors of the US economy after the government.

$100m startups by industry, since 1930

The study’s not entirely fair to technology companies, because it insists telecommunications outfits are a different category. The definition of “industrials” is also problematic, as many technology companies offer professional services. Consumer discretionary is also a tricky one: do punters really need a fondleslab at home? ®

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/16/tech_startups_not_best_source_of_jobs_and_growth/

How does one fairly distribute £150m to extend Blighty’s mobile coverage? Give the whole lot to a private company that has paid no corporation tax for four years and effectively holds a monopoly.

That company is Arqiva, which owns the vast majority of the UK’s TV, radio and mobile phone transmitters. It will get £150m of taxpayers’ cash with which to extend its network of sites, which are rented out to broadcasters and phone operators. We’re told the money will extend coverage to 60,000 premises and “sections of road”, but it will certainly help Arqiva maintain its billion-pound annual revenue.

Not that the revenue leads to profit, thanks to a system of loans and repayments that ensure shareholders make money and the company avoids paying UK corporation tax – as revealed by a Financial Times investigation last year.

There is no suggestion of any wrongdoing. John Cresswell, Arqiva’s CEO, told the FT: “Arqiva has invested heavily in the UK’s infrastructure, including £630m in the digital [TV] switch-over. In recognition of this considerable investment in the UK’s communications infrastructure, the government has agreed a tax exemption for Arqiva from 2009.”

Meanwhile, said government has thrown a pot of public cash at improving the nation’s mobile internet connectivity, showering Arqiva with the gold. But how else was it going to distribute the money without upsetting the mobile industry? The network operators would have taken the cash and complained bitterly about the amount the other operators were given, and Arqiva’s dominance means there isn’t really anyone else who could use the nine-figure sum.

When the funding was announced by Chancellor George Osborne, back in October 2011, even the network operators said they weren’t interested in the cash, but instead wanted planning laws relaxed to allow the construction of bigger and beefier phone masts and the trenches of cabling needed to serve them.

In rural areas, the trenches are generally the expensive bit: the technology keeps getting cheaper but the cost of digging across someone’s land costs an arm and a leg. Microwave links can reach anywhere with line of sight, but there’s still power cables and access for regular maintenance which can involve building roads and all sorts.

The Mobile Operators’ Association pulled up extreme examples – £350,000 to connect one Welsh base station, for instance – but pegged typical costs of delivering power to a site on a farm at £25,000, making it the most expensive part of the process.

But the association was more concerned with planning laws, and how to mitigate them. Fortunately that appeal was also heard and existing masts can now be hoiked up to 20m and fattened up by a third without additional planning permission.

That enables Arqiva to stick antennas for multiple operators onto the same set of steel, which is important with 4G networks rolling out as network operators combine their 3G systems and strip redundant radio gear from masts.

Giving £150m of government cash to a private company to extend its near-monopoly may seem weird, but really the Ministry of Fun had little other option once Osborne had made his 2011 promise. ®

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/15/arqiva_bung/

Big British-based tech firms like Autonomy and BSkyB have subsidiaries in onshore and offshore tax havens, and avoid paying taxes in much the same way as has been highlighted in the case of US firms Google and Amazon.

Research shows that most of Blighty’s top companies have offshoots in tax havens, according to charity ActionAid. Just two corporations listed in the UK’s FTSE 100 had no subsidiaries at all in areas that could help with tax avoidance.

While banks like Barclays, HSBC and RBS are seen as the worst offenders, companies like Vodafone and Sage from the tech and telco sector also have branches in havens like the Cayman Islands and the Bahamas.

The research uses a wider definition of tax haven than usual, including countries like Ireland and the US state of Delaware, which have both come under pressure for their low taxes and easygoing regulatory environment.

Broadcaster BSkyB has ten per cent of its 110 offshoots in tax havens, according to ActionAid’s data, including a branch in Ireland and two in Delaware, as well as two companies in the Netherlands Antilles and one in the British Virgin Islands.

A Sky spokesperson, however, told The Register that the companies identified in the research “have either been wound up, are in the process of being wound up, or are subject to UK taxation”.

“Sky directly contributes more than £1 billion a year in tax – 40 per cent more than the average FTSE 100 company. We’re very proud of the significant – and growing – contribution we make to the British economy,” insisted the broadcaster.

ActionAid said the Vodafone Group has nearly a quarter of its 387 subsidiary companies in tax havens, including 11 firms in Delaware and another 11 in Ireland. HP-owned Autonomy and the Sage Group have 15 and 41 branches respectively in tax shelters. Sage has an astonishing 19 subsidiaries based in Ireland and ten in Delaware, while Autonomy has seven companies in Delaware and an offshoot on the British Virgin Islands.

A HP spokesman told The Reg: “We believe that HP has been fair and compliant in the reporting of income, profits, and payment of all corporate income taxes to the governments in the markets where we operate. HP adheres to the highest ethical standards and maintains a culture of cooperation with all regulatory authorities.”

Scrutiny stepped up on corporate giants’ tax paperwork

Simply having subsidiaries in tax-lite countries doesn’t mean companies are up to anything shady and tax haven structures are generally not actually illegal at all, but corporations have increasingly come under scrutiny for their tax practices in the wake of the global financial crisis.

Austerity-suffering Joe Public has been none too keen on the idea that companies are paying less than their “fair share” – although no one seems to know exactly what that fair share should be – and politicians have been quick to appease the masses with at least the appearance of doing something.

In Blighty, the Public Accounts Committee has been taking evidence from multinationals like Google, Amazon and Starbucks over their tax bills and looking into the big accounting firms that help them manage their taxes as well, like Ernst Young.

Both UK prime minister David Cameron and chancellor of the exchequer George Osborne have also promised that tax avoidance and evasion will be at the top of the agenda during the country’s presidencies of the G7 and G8 this year.

At a G7 finance ministers’ and central bank governors’ meeting on Saturday, Osborne said that everyone “agreed on the importance of collective action to tackle tax avoidance and evasion”.

“We discussed the development of a new multi-lateral global standard on the automatic exchange of information based on Foreign Account Tax Compliance Act (FATCA), and action to improve the transparency of legal structures,” he said in a speech.

“What I would say about this initiative is this: it’s incredibly important that companies and individuals pay the tax that is due, and this is important not just for Britain and British taxpayers but also important for many developing nations as well.”

ActionAid’s tax justice policy adviser Mike Lewis said that the UK in particular needed to do more to address the problem of tax havens.

“Four years after G20 leaders promised an end to tax havens, tax haven structures are near-universal amongst the UK’s biggest multinationals,” he said.

“Now, with David Cameron promising action on tax havens at this year’s G8, the problem is on the UK’s doorstep. The UK is responsible for one in five of the world’s tax havens – that’s more than any other country.

“Poor countries lose an estimated three times more money to tax havens than they receive in aid each year – money needed to build roads, fund schools and finance developing countries’ own fight against hunger and poverty,” he added. ®

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/14/uk_firm_subsidiaries_tax_havens/

Investor Carl Icahn and fund Southeastern Asset Management have proposed an alternative to the Mike Dell-led buyout of Dell.

In a letter to the PC firm’s board, Icahn and Southeastern said they reckoned Dell shareholders should get the option to hang onto holding stock in Dell and take an additional $12 in shares or cash.

The plan aims to stop Dell the man and partners Silver Lake from going through with their $24.4bn bid to take the company private, a deal that the latter branded the “Great Giveaway”.

“We want this Board to hear from both Icahn and Southeastern loud and clear that it is insulting to shareholders’ intelligence for the Board to tell them that this Board only has the best interests of shareholders at heart, and then accept Michael Dell’s offer to purchase the company he founded for $13.65 per share, a price far below what we consider its value to be,” the letter, filed with the SEC, said.

“You not only sanctioned Michael Dell’s offer, which amazingly allows him to purchase the company from shareholders with their own money but, to add insult to injury, you have agreed to give Mr Dell a break-up fee of up to $450 million.”

Icahn and Southeastern, which hold a 13 per cent stake in the firm versus Mike Dell and co’s 16 per cent, said that there was still plenty of mileage left in the firm, outside of PCs, which are not where its “ultimate long-term opportunity lies”.

“Dell has a meaningful opportunity to upgrade its overall global operations. This includes reining in years of excessive and bloated overhead, marketing and supply chain costs as highlighted by the Boston Consulting Group,” the investors said in the letter.

They added that Dell could thrive as a public company if it moves from making computers to providing enterprise services.

“Dell just needs the right management team in place to execute on the opportunity we have laid out, a team that is incentivised to work for all shareholders and not just themselves – a team that we believe a new board operating outside of the constraints of this hostile situation, could certainly assemble,” they said.

Icahn and Southeastern Asset Management also threatened the board with litigation if they agreed to Mike Dell’s offer and the transaction turned out to “be a home run” for him.

“IT IS NOT TOO LATE TO DO THE RIGHT THING, AND THEREBY ANSWER THE ONGOING CRITICISM AND LEGAL ATTACKS THAT THE GOING PRIVATE TRANSACTION HAS ATTRACTED,” the letter shouted. ®

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/10/icahn_southeastern_dell_proposal/

Investor Carl Icahn and fund Southeastern Asset Management have proposed an alternative to the Mike Dell-led buyout of Dell.

In a letter to the PC firm’s board, Icahn and Southeastern said they reckoned Dell shareholders should get the option to hang onto holding stock in Dell and take an additional $12 in shares or cash.

The plan aims to stop Dell the man and partners Silver Lake from going through with their $24.4bn bid to take the company private, a deal that the latter branded the “Great Giveaway”.

“We want this Board to hear from both Icahn and Southeastern loud and clear that it is insulting to shareholders’ intelligence for the Board to tell them that this Board only has the best interests of shareholders at heart, and then accept Michael Dell’s offer to purchase the company he founded for $13.65 per share, a price far below what we consider its value to be,” the letter, filed with the SEC, said.

“You not only sanctioned Michael Dell’s offer, which amazingly allows him to purchase the company from shareholders with their own money but, to add insult to injury, you have agreed to give Mr Dell a break-up fee of up to $450 million.”

Icahn and Southeastern, which hold a 13 per cent stake in the firm versus Mike Dell and co’s 16 per cent, said that there was still plenty of mileage left in the firm, outside of PCs, which are not where its “ultimate long-term opportunity lies”.

“Dell has a meaningful opportunity to upgrade its overall global operations. This includes reining in years of excessive and bloated overhead, marketing and supply chain costs as highlighted by the Boston Consulting Group,” the investors said in the letter.

They added that Dell could thrive as a public company if it moves from making computers to providing enterprise services.

“Dell just needs the right management team in place to execute on the opportunity we have laid out, a team that is incentivised to work for all shareholders and not just themselves – a team that we believe a new board operating outside of the constraints of this hostile situation, could certainly assemble,” they said.

Icahn and Southeastern Asset Management also threatened the board with litigation if they agreed to Mike Dell’s offer and the transaction turned out to “be a home run” for him.

“IT IS NOT TOO LATE TO DO THE RIGHT THING, AND THEREBY ANSWER THE ONGOING CRITICISM AND LEGAL ATTACKS THAT THE GOING PRIVATE TRANSACTION HAS ATTRACTED,” the letter shouted. ®

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/10/icahn_southeastern_dell_proposal/

Investor Carl Icahn and fund Southeastern Asset Management have proposed an alternative to the Mike Dell-led buyout of Dell.

In a letter to the PC firm’s board, Icahn and Southeastern said they reckoned Dell shareholders should get the option to hang onto holding stock in Dell and take an additional $12 in shares or cash.

The plan aims to stop Dell the man and partners Silver Lake from going through with their $24.4bn bid to take the company private, a deal that the latter branded the “Great Giveaway”.

“We want this Board to hear from both Icahn and Southeastern loud and clear that it is insulting to shareholders’ intelligence for the Board to tell them that this Board only has the best interests of shareholders at heart, and then accept Michael Dell’s offer to purchase the company he founded for $13.65 per share, a price far below what we consider its value to be,” the letter, filed with the SEC, said.

“You not only sanctioned Michael Dell’s offer, which amazingly allows him to purchase the company from shareholders with their own money but, to add insult to injury, you have agreed to give Mr Dell a break-up fee of up to $450 million.”

Icahn and Southeastern, which hold a 13 per cent stake in the firm versus Mike Dell and co’s 16 per cent, said that there was still plenty of mileage left in the firm, outside of PCs, which are not where its “ultimate long-term opportunity lies”.

“Dell has a meaningful opportunity to upgrade its overall global operations. This includes reining in years of excessive and bloated overhead, marketing and supply chain costs as highlighted by the Boston Consulting Group,” the investors said in the letter.

They added that Dell could thrive as a public company if it moves from making computers to providing enterprise services.

“Dell just needs the right management team in place to execute on the opportunity we have laid out, a team that is incentivised to work for all shareholders and not just themselves – a team that we believe a new board operating outside of the constraints of this hostile situation, could certainly assemble,” they said.

Icahn and Southeastern Asset Management also threatened the board with litigation if they agreed to Mike Dell’s offer and the transaction turned out to “be a home run” for him.

“IT IS NOT TOO LATE TO DO THE RIGHT THING, AND THEREBY ANSWER THE ONGOING CRITICISM AND LEGAL ATTACKS THAT THE GOING PRIVATE TRANSACTION HAS ATTRACTED,” the letter shouted. ®

Article source: http://go.theregister.com/feed/www.theregister.co.uk/2013/05/10/icahn_southeastern_dell_proposal/