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Apple Remains Fundamentally Undervalued After Tax Hit

The firm has almost $215 billion in international cash on hand, so the record tax bill will make only a small dent in the firm's cash cushion.

We will maintain our $133 fair value estimate for

In essence, the European Commission considered Apple's tax structure within Ireland, which was in compliance with Irish and international laws, as anticompetitive, as Apple received tax breaks (presumably in exchange for creating jobs in the region) that allowed the company to pay a tax rate as low as 1% in 2003 and 0.005% by 2014 on all revenue from the European Union, not just sales within Ireland. We estimate that Apple earned roughly $71 billion in cumulative operating income in Europe over the time frame in question (2003-14).

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About the Author

Brian Colello

Equity Strategist
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Brian Colello, CPA, is an equity strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. In addition to leading Morningstar’s technology sector team, he covers semiconductor and hardware companies. Colello was a senior equity analyst before assuming his current role in 2015.

Before joining Morningstar in 2008, he worked in public accounting for KPMG and served as a manager in corporate finance for BMG Music, a subsidiary of Bertelsmann AG.

Colello holds a bachelor’s degree in accounting from Bucknell University and a master’s degree in business administration from Wake Forest. He is also a Certified Public Accountant.

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