Apple's 2009 earnings up nearly 44% under new accounting rules - analyst

September 24, 2009: 7:08 AM ET

How much will Apple's (AAPL) reported earnings be affected by the new accounting rules approved Wednesday?

A lot, says Piper Jaffray's Gene Munster.

In a note to clients issued early Thursday, Munster offered his estimated earnings per share under the new and old rules for fiscal years 2009 (which ends in two days) and 2010:

  • 2009 EPS: $8.21, up from $5.71  -- a 43.8% increase
  • 2010 EPS: $8.90, up from $6.00  -- a 48% increase

Apple wouldn't be required to switch to the new accounting method until Dec. 2010, but Munster expects the company will start as soon as possible, probably with the new fiscal year that begins next week.

"While this has been expected for the last month, we believe this will be a positive for shares of AAPL," he wrote, before raising his price target to $235 from $186.

Of course it's possible that the impact of the rule changes have already been factored into Apple's share price. The stock closed Wednesday at $185.50, having soared 137% over the past eight months. The stock is up more than 10% since Aug. 31, when Munster first reported that the Financial Accounting Standards Board (FASB) task force was considering the rule changes.

What are the new accounting rules? Munster does a pretty good job of explaining them:


  • Accounting board votes 5-0 for pro-Apple rule change

    In the end, the vote was unanimous.

    After months of lobbying by a stack of blue-chip high tech companies, the FASB -- the entity that sets accounting standards in the United States -- voted 5-0 Wednesday to approve an accounting change that could boost the reported earnings, and the stock price, of dozens of Silicon Valley firms.

    The new rules are expected to be especially beneficial to Apple (AAPL). They would put MORE

    - Sep 23, 2009 3:52 PM ET
  • Apple: Accounting rule vote today

    [UPDATE: The FASB voted 5-0 Wednesday to approve the rule change. See here.]

    The Financial Accounting Standards Board (FASB), the organization empowered by the SEC to set accounting standards in the United States, is set to vote Wednesday, Sept. 23, on rule changes that could significantly affect Apple's (AAPL) reported earnings and stock price, according to a report to clients issued Tuesday by Morgan Stanley's Kathryn Huberty.

    The new rules -- for MORE

    - Sep 22, 2009 8:13 AM ET
  • Accounting rule change in Apple's favor

    A change in accounting rules for which Apple (AAPL) -- among other high-tech companies -- lobbied heavily won tentative approval last Thursday. The change could significantly affect both the company's reported earnings and its stock price.

    The new rules are in draft form and must still win final approval from the FASB -- the organization empowered by the SEC to set accounting standards in the United States.

    But they have the force MORE

    - Sep 14, 2009 9:51 AM ET
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