They made 1.2 billion in 2018 income before taxes compared to 485 million last year.
The corporate tax rate was brought down from 35% to 21% in 2018.
So they should have paid 257 million in Federal, 33.6 in State and 63 million in foreign taxes
With the Federal and California R&D tax credits (140.7 million) and tax benefits on stock based compensation (191 million) and other odds and ends they brought it down to 15 million for an effective 1% tax rate.
"In 2018, the difference between our 1% effective tax rate and the Federal statutory rate of 21% was primarily due to the recognition of excess tax benefits of stock-based compensation, Federal and California research and development credits (“R&D”), and updated adjustments related to U.S. tax reform as a result of the U.S. federal tax return filing, partially offset by state taxes, foreign taxes, non-deductible expenses and the international provisions from the U.S. tax reform enacted in December 2017."
Netflix has also deferred tax assets - easiest to think of as tax prepaid but could also include taxes paid to foreign countries, losses from previous years, etc.) of 689 million. So they counted the taxes against it.
In the cash flow stateemnt the supplemental disclosure is 131,069 for Income taxes paid. So there was actual cash tax payments made.
My father loves music. Famously miserly, he wouldn't mind a monthly paycheck on an audio system.
I on the other hand have never enjoyed music. I think it's a rebellion thing. But also that sad music made me despondent but happy music didn't affect me to the same extent.
The way my father managed to reel me in was to ask me to predict where the musician would take the song. In things like Jazz or improvised music, this is pretty hard. But even in well known classical pieces, this kind of prediction and correction is a pretty interesting exercise.
My takeaway from this kind of exercise is that I enjoy music as a pattern matching exercise. It's like a good joke - when you run into an unexpected punchline.
I switched from 10 years of software development to a technical product manager role four years ago. When I made the switch, I had the same concerns you write about.
The switch was driven by four reasons -
1. Financial growth and social status.
2. More meaningful impact by picking what was to be developed rather than being a cog in the wheel.
3. Desire to learn new skills. To prove to myself that I could do it if I wanted to.
4. Burn out on software development on the same product and company for 10 years.
Of these - the financial growth has not materialized but all the others have been validated. Searching on glassdoor and other salary sites, I frequently find developers commanding higher salaries than managers.
I've found that as a manager, you are still coding. But you are coding with people and organizations rather than Python. The methods and interfaces aren't well documented. The object structure has evolved through acquisitions and bolt-ons and VPs staking out claims. I rely on the org chart as much as I used to rely on architecture diagrams. The build and release cycles are slow and the lack of daily measurable accomplishments are hard to deal with at first. My predictable schedule and zero inbox days are over. This sounds exciting but on some days the multi-tasking and lack of flow is horrendous. I used to be only able to cook a single dish at a time but now I can do multiple dishes in parallel - one of my learned skills that transferred to the kitchen.
To be sure, it gets better. You get better. A wonderful side effect is that my communication skills have vastly improved. My understanding of how organizations work and how to align people and objectives has increased.
Quite frequently, I wonder if i made the right choice. Whether I should go back to being a software developer. Whether the grass was greener back there. The answer is different every month. Sometimes I'm frustrated with organizations and people and other days the difficulty of setting up a functional development environment or debugging a for loop for two hours seems like a thing for crazy people to be doing.
As I muddled my way through my career options at that point - the most useful tool for me was the resonant quote - "Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover."
That - and I knew I could get back to software development whenever I wanted. In UX terms, switching is a recoverable action.
My father was a chemical engineer. He got an MBA and switched to investment banking and then to financial stock analysis. Back in the 80s, he had something similar to ValueLine and would go through them looking for P/E and EPS filters. We had racks of these financial metric newsletters and a couple of interns running this from home. Occasionally I would help out. This was my first introduction to stocks.
My dad then switched to private investment banking. He would come home and tell us stories about startups, how he invested and so on.
Then he started writing financial articles for newspapers. Mainly on Technical analysis. Some days, he would be too busy to do it and I would write the articles. I was his tech support for the graphical charting packages. The technical charting packages were also my "fruit fly"/muse for learning new languages. Every time I wanted to learn a language, I would re-implement my charting package. Dad fancies himself an astrologer so for a while there were articles on stocks and astrology. "You must be a Virgo - cause your wallet is so thick ;)"
At one point, he was the owner/editor of a newspaper publication himself and we had the union workers protesting outside our residence for a day on some matter. The newspaper died fairly quickly when we couldn't find advertising to support it.
One event from this period that sticks out. Like twelve years old are wont to do, I'd asked for a bicycle. My dad usually responds to these with - "If I invest in the bike, what will we get back?" I have better answers now. Anyway, he bought me a really unappealing cheap, robust bike that I was ashamed to drive with my friends. It never got much use.
So by the time I graduated college, I knew roughly what stocks were. I had written technical charting analysis packages, understood EPS and P/E and knew that you only put money into something if you get more money back.
For my master's thesis I worked on Genetic programming and growing technical analysis indicators to trade stocks.
This is a formidable head start but my investing record is quite pitiful. I understand a lot of the terms but not how to apply them successfully. I've found quite a few ways to fail and am now comfortable sticking with invest funds.
But I continue to invest and read up on investing. I believe it is the easiest way for me to reach my "magic number".
And I enjoy the process. But most of my money is in index funds.
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Advise:
On reflection, I can recommend the following.
1. Get a broad 30,000 foot view of the different investing philosophies (Technical analysis, Fundamental analysis, value investing, special situations, Dividend investing, etc.). Evaluate these schools against each other and against yourself. For example - I started out as a technical investor, but it made no logical sense to me. So I switched to momentum investing and sucked at that. Now I'm trying value investing on for size. Some of these methodologies will fit your personality and others will not. The book recommendations made in this thread help. Random walk down wall street says markets are efficient so don't try to beat them. Fisher's book will have you picking stocks. Some of these arguments will resonate with you and others won't. Try on these philosophies. "Strong opinions weakly held" comes to mind.
2. For value investing - forget the technical jargon and Investopedia. Approach the stock from a HN/startup/VC point of view. Imagine you are buying a business. If this company asked for your money, would you give it? What questions would you ask as a VC?
- What is the market size?
- Are the users growing?
- What is the infrastructure cost?
- What is the exit strategy?
- Who are the competitors?
- What are the risks?
Shark tank does a good job making this sort of mental modelling accessible in video form.
You only need the finance terms to answer these questions. But the first task is to ask the right questions.
The problem you'll find is that most public traded companies do lots of things and it gets confusing. Find the 1-3 most important things to focus on or look for smaller companies.
3. As others have recommended, take a stock and make a recommendation. Write out an analysis of whether you would buy or sell. Then look at the analyst reports for that stock. Look at seekingalpha.com articles. What did you miss? What insight did you have that nobody else did? This is the hard work of having an opinion that cannot be done from videos. Investing is a contact sport for ideas and you need to understand the feel of the soccer ball on your feet.
4. Be realistic. What kind of returns are you expecting? Anything more than 10-15% is unrealistic in the early days. Even if the return exists, would you be willing to risk enough in that one opportunity to make an overall difference in your net-worth? This is where portfolio management comes in. The more you diversify, the less risk and return you have. The less you diversify, the more certain you have to be in your abilities. For those of us who are unsure, getting to that point of certainty is long road.
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Good luck - you have a wonderfully interesting road in front of you that will keep you excited for years.
My manager and I had a 10 year relationship going. I had just transitioned to a new role, had a new born and taken on too much. I was feeling it for 6 months but finally broke at around 9 months. I told him I couldn't do it anymore and that I wanted a sabbatical. I told them that my backup plan was to just quit.
He talked me off the ledge and within a day had transitioned my troublesome projects to others and moved me to a four day work week to recover. He had to run this by manager's three levels up, do an insane amount of HR paperwork (fulltime -> not fulltime, pro-rated salary adjustment, etc.). All this happened in a space of two days.
I stayed on a four day week for a couple of months. It was magical. He retained my reduced workload when I came back full time.
His first comment when I initially cracked - "you should have come to me sooner".
The quick reaction, sympathy and support I got cemented my loyalty to an outstanding manager.I'm still here a couple of years later.
They made 1.2 billion in 2018 income before taxes compared to 485 million last year.
The corporate tax rate was brought down from 35% to 21% in 2018. So they should have paid 257 million in Federal, 33.6 in State and 63 million in foreign taxes
With the Federal and California R&D tax credits (140.7 million) and tax benefits on stock based compensation (191 million) and other odds and ends they brought it down to 15 million for an effective 1% tax rate. "In 2018, the difference between our 1% effective tax rate and the Federal statutory rate of 21% was primarily due to the recognition of excess tax benefits of stock-based compensation, Federal and California research and development credits (“R&D”), and updated adjustments related to U.S. tax reform as a result of the U.S. federal tax return filing, partially offset by state taxes, foreign taxes, non-deductible expenses and the international provisions from the U.S. tax reform enacted in December 2017."
Netflix has also deferred tax assets - easiest to think of as tax prepaid but could also include taxes paid to foreign countries, losses from previous years, etc.) of 689 million. So they counted the taxes against it.
In the cash flow stateemnt the supplemental disclosure is 131,069 for Income taxes paid. So there was actual cash tax payments made.