Senate Probe Finds Apple Avoids Billions in Taxes

Feng Li/Getty Images(WASHINGTON) -- A new Senate investigation has found that Apple Inc. has used a complex web of offshore companies – particularly three in Ireland – to avoid paying billions of dollars in U.S. income taxes.

Apple executives will visit Capitol Hill on Tuesday to respond to the findings contained in a 40-page review by the Senate Permanent Subcommittee on Investigations.

The company is not accused of breaking the law, but rather using loopholes in the American tax code.

“It’s like saying you haven’t shifted the golden eggs offshore after you transferred the golden goose offshore,” Sen. Carl Levin of Michigan, chairman of the committee, told reporters late Monday at the Capitol.

The Senate committee, which conducted similar investigations last fall of Microsoft and Hewlett Packard, accused Apple of shifting profits overseas by using a cost-sharing agreement to transfer intellectual property offshore.

The investigation found that Apple negotiated a tax rate of less than 2 percent with the government of Ireland – far lower than the normal rate of 12 percent. An Irish subsidiary of Apple, which was not registered as paying taxes anywhere, had sales totaling $74 billion from 2009 to 2012.

“Apple claims to be the largest U.S. corporate taxpayer, but by sheer size and scale, it is also among America’s largest tax avoiders,” Sen. John McCain said on Monday. “A company that found remarkable success by harnessing American ingenuity and the opportunities afforded by the U.S. economy should not be shifting its profits overseas to avoid the payment of U.S. tax, purposefully depriving the American people of revenue.”

The findings of the investigation were set to be released at 7 p.m., but Apple sought to get ahead of the report by releasing its testimony Monday. In a 16-page response, Apple vigorously defended its business practices and described its company as “likely the largest corporate income tax payer” in the country — with $6 billion in 2012 alone.

“Apple does not use tax gimmicks,” the company said in a statement. “Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the U.S. in order to avoid U.S. tax.”

Copyright 2013 ABC News Radio

Stocks Clip Recent Rallies, Close Lower

Hemera/Thinkstock(NEW YORK) -- Investors on Monday took a timeout from the bull market. Declining stocks in the same top-performing sectors pulled the markets down.

The Dow Jones Industrial Average lost 19.12 points, or 0.1 percent, closing at 15,335.28 Monday. The Nasdaq Composite closed off two points, or 0.1 percent, at 3,496.43. The S&P 500 fell 1.18 points, or 0.1 percent, to 1,666.29.

The major markets rallied over the last week with help from strong corporate earnings, with the Dow climbing 1.6 percent, and the Nasdaq and S&P adding 1.8 percent and 2.1 percent, respectively.

As for this week, investors are likely cautious ahead of Federal Reserve Chairman Ben Bernanke's testimony to Congress on Wednesday. They'll be looking for signs that the Fed's easy monetary policy may be ending -- a factor that's been driving stock indeces to record highs.

Meanwhile, Yahoo! shares advanced following reports that the company is buying the popular blogging site, Tumblr, for  $1.1 billion. The move is intended to attract more advertising and younger users for the internet company.

Copyright 2013 ABC News Radio

Yahoo! Buys Tumblr for $1.1 Billion

FRED DUFOUR/AFP/Getty Images(NEW YORK) -- Yahoo! is investing big time in social media.  The company announced on Monday that it has purchased Tumblr, the popular blogging and social media network, for $1.1 billion in cash.

"I'm delighted to announce that we've reached an agreement to acquire Tumblr!," Yahoo CEO Marissa Mayer announced on her own Tumblr blog Monday morning.

Mayer stresses in her Tumblr post and in an official company statement that Yahoo will "not screw it up," meaning Tumblr.  The company plans to keep the platform an independently operated business with David Karp, the Tumblr's founder and CEO, remaining on.

Tumblr allows users to create their own blogs, follow other blogs on the network and like them, and reblog posts.

"We're not turning purple," Karp announced on Tumblr's official Tumblr News page.  "Our headquarters isn't moving.  Our team isn't changing.  Our roadmap isn't changing.  And our mission -- to empower creators to make their best work and get it in front of the audience they deserve -- certainly isn't changing."

While Yahoo promises not to change Tumblr's product, the companies will now work together to create advertising opportunities.  Mayer also says that the companies together will create a very large media network.

"On many levels, Tumblr and Yahoo! couldn't be more different, but, at the same time, they couldn't be more complementary," Mayer said in a statement.  "Yahoo is the Internet's original media network.  Tumblr is the Internet's fastest-growing media frenzy."

Mayer, 38, took over as Yahoo CEO in July 2012 after over 10 years at Google.  At Yahoo she is aiming to turn the company around, investing heavily in mobile products and reinvigorating current products, including Yahoo Mail.  She has also overseen the acquisition of other companies, including Summly, Astrid and GoPollGo.

Tumblr, however, will be the largest Yahoo acquisition to date under Mayer's stewardship.  She and the Yahoo Board, which voted on the acquisition over the weekend, are hoping Tumblr is one of the answers to making the company a real tech player again.

Founded in 2006, Tumblr has just 175 employees and has become an extremely popular blogging and social media network.  According to Tumblr, 90 million posts are posted on Tumblr every day, with 900 posts per second.  There are a total of 100 million blogs on the service.

Copyright 2013 ABC News Radio

Food Delivery Services GrubHub, Seamless to Merge

GrubHub/Seamless(NEW YORK) -- It's late, you didn't have time to make dinner, and now you're in the mood for sushi. Chances are, you reach for your phone, fire up either the Seamless or GrubHub app, sort by restaurant, select your meal, place your order and wait for the delivery person to knock on your door.

Soon, those two food app companies will become one. Seamless and GrubHub announced Monday that they will be merging.

However, that doesn't mean the apps themselves will become one, at least for now.

"We have the luxury of having two amazing brands right now. Honestly, we don't have plans to consolidate brands at this time," Matt Maloney, CEO and co-founder of GrubHub, told ABC News. "We are looking to position ourselves as a combined unit within this massive industry."

The deal still awaits regulatory approval to become final.

Maloney will become the CEO of the combined company, while Seamless CEO Jonathan Zabusky will serve as president. The name of the combined company or the terms of the deal have not been released yet.

So why combine the companies if not for making the ultimate food takeout app? Maloney said it's all about driving more business to restaurants and creating a better experience for takeout fiends.

"The concept here is you have two companies which are very complimentary, solving much of the same problems on the same day," he said.

He pointed out that Seamless has built an "incredible iPad app," but GrubHub's tablet app for those looking to order from home isn't great. GrubHub, on the other hand, has in-restaurant tablet technology, which Seamless doesn't. The two companies can take advantage of the other's technology.

Additionally, the acquisition will expand the respective restaurant networks of both services. Those looking to order food in 500 cities across the U.S. to will be able to order from 20,000 local takeout restaurants under the combined company.

Other companies like Delivery.com and ChowNow are much smaller.

According to GrubHub and Seamless, last year the online and mobile platforms of both companies sent approximately $875 million in food sales to restaurants, resulting in combined revenue of over $100 million.

Ultimately, though, Maloney said, it's about the future of food delivery -- getting those sushi rolls faster and in a new way.

"We are going to be able to do some really cool stuff to redefine online ordering," he said.

Copyright 2013 ABC News Radio

Domino’s Brazil Tests Smellvision in DVDs

iStockphoto/Thinkstock(NEW YORK) -- If you’re traveling in Brazil, pop in a DVD and find yourself crazing pizza, then Domino’s has you right where they want you.

Domino’s independent franchisees in the South American country have partnered with an ad agency there to use DVDs embedded with the scent of pizza to lure in movie watchers.

Ten discs available in ten video rental stores throughout Sao Paulo and Rio de Janeiro will carry the unmistakable scent of pizza, thanks to the discs being stamped with thermal ink and flavored varnish, according to the trade publication Advertising Age.

When the discs heat up in the DVD player, so too does the thermal ink and varnish, so when the movie watcher ejects the DVD, they get a whiff of a pizza-like smell along with it.

The DVDs look like mini pizzas and contain the tagline, “Did you enjoy the movie? The next one will be even better with a hot and delicious Domino’s Pizza.”

The “smellvision” DVDs are only being tested by Domino’s in Brazil.  A spokesman for the Michigan-based pizza chain says home movie watchers and Domino’s lovers in the U.S. can rest their noses.

“These are independently owned stores in Brazil and this is a program they’re doing in that country for those stores,” the spokesman told ABC News.  “We wish them well and hope it is successful.”

Copyright 2013 ABC News Radio

Three Easy Financial Lessons for Your Kids

iStockphoto/Thinkstock(WASHINGTON) -- It's graduation season. Did your teenager have to take a financial literacy course to don that cap and gown? Probably not.

According to the Council for Economic Education, as of 2011, 22 states required high school students to take an economics class -- the "supply and demand" type, not the "how to balance your checkbook type." Only 14 states offered personal finance as a high school class, either on its own or as part of the economics curriculum.

In a recent Credit.com telephone survey conducted by GfK Roper, more than 60 percent of parents said U.S. kids are not learning enough about how to manage their own money. More than 90 percent said they want financial literacy to be a mandatory high school course.

So why don't these parents teach their kids financial responsibility themselves? Because they don't think they can. When the National Foundation for Credit Counseling asked adults to grade their financial knowledge, 41 percent said they would give themselves a C, D or F.

Here are three tips from ABC’s Good Morning America consumer correspondent Elisabeth Leamy to help parents get started:

1. Don't take stuff that's not yours.

That's the kindergarten version. Here's the high school version: Don't buy stuff with money that's not yours. In other words, when you go off to college in the fall and you're offered all sorts of shiny credit cards, take a polite pass. Credit card debt is devastating. Save up your own money to buy your own stuff.

2. Be on time.

In kindergarten, we learn the importance of getting to class punctually so we don't get marked down. In high school, kids should learn the importance of paying their bills on time, so they don't get marked down. "Payment history" makes up the single biggest chunk of your credit score, 35 percent. That means simply paying your bills on time boosts your score tremendously and yet many adults believe paying late is no big deal. If you're a procrastinator, automate your payments to come straight out of your checking account so you get this right.

3. Get a good report card.

In kindergarten you get a report card. As an adult you get a credit report. Your credit report is a history of all your financial transactions and how well you handled them. Did you take on too much debt? Did you pay on time? You then get a credit score of between 300 and 850 based on that report. Your credit score is a numerical predictor of how likely you are to pay your debts.

Banks prefer to lend money to people with scores of 720 and above, so that's what we should all try for. Why? Because having a lower score costs you money. More math: If you have a credit score of 720, you can get a car loan at about 6 percent. If your score is 620, just 100 points lower, your interest rate will be about 12 percent. Over the course of a 3-year loan, for $25,000, the lower rate will save you $2,736 in interest!

A good credit score is crucial. And yet when EverFi, an education technology company, asked high school students what a good score is, most said 500 and more than a third believed 300 was a good score! Yes, yet another survey -- one of dozens I found as I researched this column. If we spent half as much time teaching kids financial literacy as we do studying their lack of it, that would be a start. And we can start with those basic lessons we all learned in kindergarten.

Copyright 2013 ABC News Radio

Survey: US Economy Expected to Grow Through 2014

Comstock Images/Thinkstock(NEW YORK) -- The economy is expected to pick up strength between now and the end of 2014, according to the latest outlook survey from the National Association for Business Economics (NABE).

"The panelists are estimating 2.4 percent growth in real GDP (gross domestic product) from the fourth quarter of 2012 to the fourth quarter of 2013 and they suggest an improvement in real GDP growth to 3 percent in 2014," says Dr. Nayantara Hensel, chair of the NABE Outlook Survey Committee.

Hensel says the 49 panelists surveyed are more upbeat about consumer spending, the housing market and unemployment.

"The panelists are predicting an improvement in the unemployment rate for this year and next year, in fact they're suggesting that by the fourth quarter of 2013, the unemployment rate will be at 7.4 percent, by the fourth quarter in 2014 it will be at 6.8 percent," she says.

But they see one area of concern: government spending cuts.

"The panelists suggest an even stronger decline in government spending this year relative to last year, which negatively impact GDP growth," Hensel says.

"The economy only grew about two and a half percent in the first quarter of this year and in large part that was because of the sharp 11 and a half percent drop in military spending," she notes.

Copyright 2013 ABC News Radio

Bomb Shelter Boom Sees Underground Pools, Basketball Courts

iStockphoto/Thinkstock(NEW YORK) -- The latest real estate boom to sweep America comes with all the trappings of luxurious living: custom-built swimming pools, gyms, full-length basketball courts and even airplane hangars. The only catch is that this time, the features are all buried underground.

The boom in bomb shelter sales over the past 15 years has taken the spartan 1950s notion of a fallout shelter and given it a makeover, according to the owners of three companies that make and sell shelters.

Now, custom installations can create 100,000-square foot underground dwellings that could hold dozens of people for months or years.

"You can have all your major amenities: TV, high power and high voltage (appliances)... horticulture rooms where you can grow vegetables and gardens, a full shower, all the amenities of your full home. We're not limiting what people can do," said Brad Roberson, marketing director for Rising S Company, which builds and installs custom shelters.

The basic requirements that most owners want in a shelter include air filtration systems to protect from nuclear, chemical and biological warfare, ventilation systems and a toilet system, as well as blast-proof and fallout-proof casing on the outside, he and other makers told ABC News.

But in addition to that, shelters can have "secret doors, hidden passageways, panic rooms, bulletproof glass," running water, toilets, showers and electricity, according to Roberson.

"Budget and imagination are the only limits," he said.

A bunker on the small side of 10 feet by 20 feet starts at about $54,000.  They go up from there to $10 million, Roberson said.

In the past 15 years, companies that make and sell underground bunkers have sprouted up around the country, mainly in the West and South, according to the founders of three companies.

"I think probably around the year 2000 we started seeing quite an increase in sales," said Sharon Packer, co-owner of Utah Shelter Systems in Draper, Utah.  Her company installs shelters made out of 10-foot wide concrete pipes linked together to create rooms six feet underground.

"People were concerned about the very real issue of possible effects on our computers.  'Y2K' started the upsurge, and for 13 years it's been a good steady business," Packer said.  "After 9/11 we had a big surge in the East, in New York."

Recently, fears of a nuclear armed Iran or North Korea have stoked the fear that a nationwide disaster would force residents to retreat to safety underground, to wait out nuclear fallout or social instability, Packer and others said.

"It's sad to say, the worse the state of affairs get, our government gets, the closer we see these policies the government is forcing down our throats, and foreign threats as well.  It inflames peoples' desire to give themselves a retreat," Roberson said.

"People are awakening to the threat," Packer said.  "A lot of it is the terrorist attacks, a lot of it is the economy.  People are concerned about having a government failure.  Some of it is Earth changes."

Copyright 2013 ABC News Radio

Winning Powerball Ticket Worth $590 Million Sold in Florida

Scott Olson/Getty Images(ZEPHYRHILLS, Fla.) -- A single ticket matching all the numbers in Saturday's $590.5 million Powerball drawing was sold at a Zephyrhills, Fla., grocery store, according to lottery officials.

The winning numbers in Saturday's drawing were 10, 13, 14, 22, 52, and a Powerball of 11.

The identity of the lucky ticket holder was not immediately known. Florida Lottery officials did not indicate whether anyone had come forward to claim the jackpot yet.

Earlier estimates had put the jackpot at $600 million, however the Powerball website reflected at adjusted total of $590.5 million, still the largest jackpot in the game's history.

The previous record for a Powerball jackpot was $587.5 million on Nov. 28, 2012.

The odds of winning the top jackpot was 1 in 175.2 million.

Lottery officials said 80 percent of the possible combinations had been purchased, making it likely a ticket would match all five numbers and the winning Powerball.

The person or group holding the ticket will have to decide whether to take an annuity or the lump sum, which comes out to $370,896,780.54.

While there was only one grand prize winner, 31 tickets matched all five numbers, earning those lucky ticket holders a prize of $1 million each. Two tickets sold in New York and South Carolina were Power Play winners worth $2 million each, according to Powerball officials.

In the one month since California joined the list of 42 states, the District of Columbia and the U.S. Virgin Islands in playing, Powerball fever has swept across the Golden State and played a part in helping the jackpot swell to a record level, lottery officials said.

The country's most populous state became one of the top ticket sellers, alongside Florida and New York. Lottery officials said total ticket sales had hit $464 million for Saturday's historic drawing.

Copyright 2013 ABC News Radio

Yahoo to Buy Tumblr for $1.1 Billion

David Paul Morris/Bloomberg via Getty Images(SAN FRANCISCO) -- On Sunday, Yahoo’s board of directors approved the purchase of the social networking and blog site Tumblr for $1.1 billion, according to The Wall Street Journal.

Speculation that Yahoo would purchase Tumblr has been building for a while now, after Adweek reported that unnamed sources were expecting a deal. On Friday, Yahoo announced a press event on Monday in New York, Tumblr’s home town.

Under CEO Marissa Mayer’s leadership, Yahoo has purchased several startups as part of the company's efforts to reach a younger, more mobile audience. Tumblr, which is very popular with teens and young adults, is the largest and highest-profile purchase so far.

Tumblr’s founder and Chief Executive David Karp has said in the past that he does not care if Tumblr makes money, and last year the site generated $13 million in revenue – far short of the $1.1 billion Yahoo is reported to be paying for it.

Tumblr does have an expansive and growing user base, with 117 million unique users world-wide as of March of this year.

There has been no official word that Tumblr’s board has also approved the deal, The Wall Street Journal notes.

Yahoo stock dipped 0.23 percent, to $26.52, in trading Friday when the press event was announced.

Copyright 2013 ABC News Radio