Apple Computer has gone to Nevada , but not on an iPod-funded gambling spree in Las Vegas; BusinessWeek reported this week that Apple has set up a wholly-owned subsidiary to manage its investments in Nevada. According to the story, Braeburn Capital was incorporated October 5th, 2005 in Reno Nevada — about 3 hours from Cupertino — and has listed Apple CFO Peter Oppenheimer and three other Apple execs set up as its corporate officers.
The new company will manage at least a part of Apple’s growing cash reserves. Apple had some US$8.7 billion in cash and short-term investments at the end of the December quarter (Q1 2006).
By incorporating Braeburn Capital in Nevada, Apple will be able to shield profits earned from the monies that Braeburn manages from California state taxes. California has some of the highest state taxes in the country, with corporate income tax, capital gains, and franchise taxes running as high as 9%.
Nevada not only doesn’t have those taxes, the state does not share information with the U.S. Internal Revenue Service (IRS), which may or may not be of interest to Apple.
BusinessWeek‘s research noted that ads placed by Braeburn Capital were looking for money managers, "specializing in fixed-income and money market investments with maturities ranging from one to five years." Among its SEC filings, Apple has said it has some $172 million in investment with maturity dates of the same "one to five years."
That could be a coincidence, however, and more may be revealed when Apple reports its Q2 number later in April.
For those curious, a braeburn apple is a variety with a "sweet and tangy flavor," according to the New York Apple Association. As of this writing, braeburncapital.com comes up as Apple’s home page, though the URL itself is not redirected.
The BusinessWeek article has additional information, mostly regarding the implications of Apple’s large cash holdings.
AAPL closed Friday at $69.79 per share, down 1.45 (-2.04%).
*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.