Apple's proposed spaceship campus goes way over budget

By on April 4, 2013, 3:30 PM

Apple’s proposed solar-powered “spaceship” campus is expected to cost an additional $2 billion more to construct than originally estimated. The total projected cost of $5 billion would make the structure more expensive to build than the new World Trade Center complex in New York City ($3.9 billion) according to five people close to the project as reported by Bloomberg.

If you recall, the late Steve Jobs personally announced plans to build the facility during a Cupertino City Council meeting in June 2011. In fact, it was his last public appearance on behalf of Apple before his death.

The co-founder was instrumental in designing the elaborate 176-acre complex which is expected to feature curved glass throughout with no seams, gaps or paintbrush strokes visible anywhere. What’s more, every wall, ceiling and floor is to be polished to a supernatural smoothness while the interior wood will consist of “heartwood” from the center of a specific type of maple tree.

It’s unclear whether or not all of these stringent design elements will stand as the architect behind the project, Foster + Partners, is reportedly trying to shave $1 billion from the budget. What we do know, however, is that the projected completion date has been moved back from 2015 to 2016 – validating rumors on the subject from late last year.

Apple could cancel the project altogether but that would likely be a huge mistake as A) they need the office space and B) it could be brand suicide. We’ll have to wait and see how investors react to these latest developments in the midst of declining stock value.




User Comments: 30

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5 people like this | Tekkaraiden Tekkaraiden said:

A construction project that goes over budget, that hardly every happens.

captaincranky captaincranky, TechSpot Addict, said:

This just in, there will be an across the board price increase in Apple's entire product line.

It does give one pause to wonder how could construction estimates be that far wrong? It's like somebody was holding the calculator wrong...:oops:

I'm still pumped for construction to begin:

Maybe they'll offer tours for seniors....

cpsheb said:

Kind of makes me sick. To bad this country is scared to tax the rich.

OneSpeed said:

Kind of makes me sick. To bad this country is scared to tax the rich.

Why the hell should tax payers pay for Apple's office building????

Demigod001 said:

Fire the project manager and institute some penalty clauses maybe? Besides why call this a space ship its a Doughnut ....Im hungry now. I wonder if its the sprinkles or the glaze that put the price up

VitalyT VitalyT said:

Kind of makes me sick. To bad this country is scared to tax the rich.

That's not the case. Here's from today's news: [link]

Guest said:

Looks like something in my broken SimCity game.

dividebyzero dividebyzero, trainee n00b, said:

Easy solution...

Reward Foxconn workers for diligent service (I.e. not topping themselves) by sending them to Cupertino for a working holiday. Should lower the labour charge substantially. Just need to make sure that the plans being followed are Apple's and not Foxconn's...

[ actually the inventively named "Round House 2" in Moscow]

3 people like this | davislane1 davislane1 said:

Financial projections are always dubious unless it's a small, short-term project. I'm a bit surprised this story even made its way around the blogosphere. But, then again, it's Apple. :/

Kind of makes me sick. To bad this country is scared to tax the rich.

I take it you don't fancy reading IRS tax collection data? But I certainly see your point. It's truly obscene that Apple can spend $5 billion paying construction workers, material suppliers, and all the other parties involved in this project to do work/provide services in an economy with, what, 7.7% unemployment? Oh yeah, and all the property taxes, zoning fees, and so forth that they need to fork over just to build on the land... And, of course, there's the taxes each of the contracted parties pay on their income from this project. Nah. They should have donated it to Uncle Sam, because he's being totally cut out from this deal and would have put the money to much better use anyways. Shame on them. /end sarcasm

1 person liked this | ikesmasher said:

Kind of makes me sick. To bad this country is scared to tax the rich.

How the heck is that relevant to apple's building? tax money has nothing to do with paying for this. Derp.

davislane1 davislane1 said:

Kind of makes me sick. To bad this country is scared to tax the rich.

How the heck is that relevant to apple's building? tax money has nothing to do with paying for this. Derp.

Allow me to translate: "Apple would not be able to fund such a lavish project if they paid their taxes. This money could have been used to improve society but, instead, is being wasted for the sake of corporate largess."

Upio said:

I dunno about you guys but when I purchase a product I don't give a shit about what the developers office looks like, I care about the price and quality. This is a blatant waste of money that should be better used to help the customer ...

2 people like this | Lurker101 said:

An Apple product that's significantly overpriced? I guess there's a first time for everything...

JC713 JC713 said:

The building looks nice but to go over the One WTCs budget is just ridiculous.... a memorial building with 1776 floors < an Apple campus in terms of a budget... that is not right.

Guest said:

Steve Jobs is gone... time to take a piece of the cake home... giant piece by giant piece.

Guest said:

Oh dear!

Some of that $160 billion off hand cash sitting around can finally be put to some use.

Zeromus said:

Easy solution...

Reward Foxconn workers for diligent service (I.e. not topping themselves) by sending them to Cupertino for a working holiday. Should lower the labour charge substantially. Just need to make sure that the plans being followed are Apple's and not Foxconn's...

[ actually the inventively named "Round House 2" in Moscow]

Didn't apple give them a pay raise?

Lionvibez said:

Kind of makes me sick. To bad this country is scared to tax the rich.

Why the hell should tax payers pay for Apple's office building????

lol who do you think is paying for it all of apple's customers and guest what they are tax payers too!

1 person liked this | MilwaukeeMike said:

Kind of makes me sick. To bad this country is scared to tax the rich.

California has some of the highest taxes of any state in the US. And the US has one of the highest corporate tax rates of any country in the world. Apple pays (on the money it doesn't send to it's office in Nevada to avoid taxes) 35% to the federal govt and another 9% to California. I know it's easier to walk through life believing what you want instead of accepting things you don't like, but be careful about speaking up on public forums. Abe Lincoln once said, 'better to remain silent and be thought a fool than to speak and remove all doubt.'

Branded said:

How can Apple pay 9% to the state of California when they have that shell office in Reno to hide their revenue from the state?

I pay 35% to the the Feds (I'll guarantee you, Apple doesn't pay that rate on all their revenue) and almost 9% to California, so why can't I open a shell office in Reno to hide much of my income from the state? If I tried that California would arrest and put me on trial. Oh wait... I'm just a citizen, not a big American corporation. That's right, the rules are different.

TS-56336 TS-56336 said:

Who the heck budgeted this thing? If I gave an estimate of three bucks and it turned out to be five, no sweat. But if one was looking to spend 3 billion and it turned out to be $5 billion??? That's some serious scratch!

davislane1 davislane1 said:

How can Apple pay 9% to the state of California when they have that shell office in Reno to hide their revenue from the state?

I pay 35% to the the Feds (I'll guarantee you, Apple doesn't pay that rate on all their revenue) and almost 9% to California, so why can't I open a shell office in Reno to hide much of my income from the state? If I tried that California would arrest and put me on trial. Oh wait... I'm just a citizen, not a big American corporation. That's right, the rules are different.

Wrong. If you setup a shell office in Reno to hide your business income from the state they can't touch any of that cash. All you have to do is go through the proper legal procedures -- just like Appel et al have. These accounting tricks are hardly privileged tax strategies.

As for Apple's tax liability... About 25% or $14.03 billion of the company's income went towards taxes in 2012.

Branded said:

No, before a non-business entity could set-up that shell office in Reno they would have to incorporate in Nevada and be a viable business in California. The California Franchise Tax Board will quickly sniff out the ruse. Many have tried it and many have been busted. And there is no way that Apple (or any other big corporation in America) paid 25% of it's total income to Federal taxes. The tax code has far too many loopholes for corporations.

1 person liked this | davislane1 davislane1 said:

@Branded

I'm just going to quote my own post.

Wrong. If you setup a shell office in Reno to hide your business income from the state they can't touch any of that cash. All you have to do is go through the proper legal procedures -- just like Appel et al have. These accounting tricks are hardly privileged tax strategies.

It should be self-evident that the process is neither straight-forward nor universally viable (otherwise every company under the sun would do it). However, it isn't a strategy limited to multi-billion dollar corporations. Smaller corps can effectively do the same thing if they've got the legal aspects worked out (as the strategy is technically lawful).

As for your latter point... [link] Apple's 2012 annual income statement clearly shows that approx. 24-25% of their pre-tax income went to the gov't.

But lets look at a few other big American corps in 2012.

Intel: 26% of pre-tax income paid to the gov't (3,868,000/14,873,000) [link]

Walmart: 31% of pre-tax income paid to the gov't (7,981,000/25,737,000) [link]

Netflix: 43.7% of pre-tax income paid to the gov't (13,328/30480) [link]

Exxon Mobile: 39.4% of pre-tax income paid to the gov't (31,045,000/78,726,000) [link]

ConocoPhillips: 51.4% of pre-tax income paid to the gov't (7,942,000/15,423,000) [link]

And there is no way that Apple (or any other big corporation in America) paid 25% of it's total income to Federal taxes. The tax code has far too many loopholes for corporations.

A little research can go a long way towards constructing a theory that isn't made out of glass.

Branded said:

Yes, you are correct that smaller companies too can take advantage of the tax codes. But the original point that you've drifted from is that wage earners (the folks who are the overwhelming force of the tax base in any country) cannot take advantage of those specific codes.

Nice bit of "research" you did on the taxes various big corps paid. Good thing everything on the Internet is correct and true, ey? Having posted your "research" (which is nothing more than SEC filings that are public as required by law) you have yet to produce the actual IRS and state tax filings (that are private as required by law). Naivety is rooted in believing whatever one wants to believe.

davislane1 davislane1 said:

Yes, you are correct that smaller companies too can take advantage of the tax codes. But the original point that you've drifted from is that wage earners (the folks who are the overwhelming force of the tax base in any country) cannot take advantage of those specific codes.

The potential for this misunderstanding is why I italicized business income in my original post. Of course individuals can't file under corporate structures!

Nice bit of "research" you did on the taxes various big corps paid. Good thing everything on the Internet is correct and true, ey? Having posted your "research" (which is nothing more than SEC filings that are public as required by law) you have yet to produce the actual IRS and state tax filings (that are private as required by law).

I had expected this type of response, so I've bolded the critical portion of your post. SEC filings for publicly traded companies are required by law (Sarbanes-Oxley and a couple other bills) to be validated by outside accounting firms who audit the reports. There is no rational justification for subscribing to the belief that they are inherently dubious.

Having posted your "research" (which is nothing more than SEC filings that are public as required by law) you have yet to produce the actual IRS and state tax filings (that are private as required by law).

"You have yet to provide information that you cannot provide. Therefore, your evidence is invalid!"

Maybe if you stare at a clock long enough you'll understand the fundamental problem with this sequence of reasoning. But make sure it's not a digital, otherwise the flaw might not come around to you.

Naivety is rooted in believing whatever one wants to believe.

And you would end your rebuttal with a magnificent feat of irony. You, sir, are my hero. (y)

Branded said:

Not surprisingly, you've stooped to making personal attacks. I'm done here now, and will simply leave you to your perfect world.

In the meantime, since you like doing research, how about trying these simple subjects: How the independent accounting firm Ernst & Young assisted its client Lehman Brothers in a massive fraud, how Jamie Dimon and JP Morgan Chase recently scooted away from Sarbanes-Oxley prosecution by simply changing accounting methods, or the role the bond rating agencies (you know, the folks who are supposed to be "independent and impartial evaluators of value" played in bringing about the Great Recession, or how the Banks Too Big to Fail used TARP funds simply as cash cows to throw at off-shore investments that did nothing for the U.S. economy.

I could go on about the privilege enjoyed by the rich and powerful but I doubt you could see the truth through your rose colored glasses. Adios!

davislane1 davislane1 said:

Simply hitting the ball I was served.

As for the events you've listed... These are truisms. I could add to your list the fraud that occurred for years at Peregrine Financial, Goldman Sachs' involvement with the housing bubble, how colleges and universities are profiting at the expense of their students, how QE is going to line the pockets of financial elites and corporations, General Electric's tax free $12 billion or so pay off a few years back, and several other instances of money and power coming together to throw the common citizenry under the bus. To deny the insidious nature of the elite class is to deny reality.

However, this discussion has been about whether or not large corporations pay significant taxes, not the corruptness of the system. You asserted that they do not and labeled me as naive when I presented evidence to the contrary, backing it up with a circular argument. If my response to this was a little too pedestrian, I'll concede to that error. As you leave, you've still yet to provide anything beyond conjecture to support your objection.

Guest said:

The cost will be more way over budget than this, because apple wants the campus made with unibody design just like their product, milled from a single block :D

avoidz avoidz said:

Somehow, it'll all be Samsung's fault.

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