bringing home the bacon

surprise, surprise, surprise! another poorly constructed ny times article [bugmenot login]. this time it's an anti-corporate piece implying drug companies are cheating on their taxes.

there are simple explanations which seem to elude the 'experts' consulted in the article. (btw, these experts include wall street analysts who as a group loved worldcom, global crossing, enron, etc--basically companies that were doing real financial shenaningans...so they aren't necessarily spot-on in their analysis)

i'll use pfizer for illustrative purposes. [for the purposes of full disclosure, i am currently a pfizer shareholder]

• while 4 outta 8 pfizer r&d locations are outside the US, the vast majority of its $7.7 billion 2004 r&d budget likely was spent in the US (since one US location has nearly as many r&d employees as the int'l ones combined). that means subsidiaries in ~35 countries don't have r&d expenses within their operations, making them more profitable
• i'll stipulate to the off-shore manufacturing scheme mentioned in the article. but, this means some foreign subsidiaries may not have manufacturing expenses within their operations, making them more profitable.
• since r&d and manufacturing expenses may not apply to some int'l subsidiaries, only selling, general & adminstrative expenses remain (~30% company wide), making them more profitable.

summing up my admittedly scatter-brained argument (i'm listening to howard stern in the background), the US operations take on much of these expenses, leaving huge profit centers abroad as much of the revenue generated falls to the bottom line

[updated for formatting and clarity]