Subscription accounting
How big was Apple's biggest quarter?
January 18, 2010: 5:09 AM ETThe fourth in a series of previews of Apple's results for the first fiscal quarter of 2010
Click to enlarge. Sources: Apple, Bullish Cross, Thomson Financial, Apple 2.0
Two weeks ago we sampled analysts' expectations for Apple's (AAPL) iPhone, iPod and Mac sales in the fiscal quarter that ended Dec. 26.
Today we look at the bottom line -- revenue and earnings per share -- for what Wall Street expects to be Apple's biggest quarter ever.
This exercise is a bit more complicated because of accounting rules –- since revised -- that required Apple to recognize iPhone revenues and associated costs over a 24-month period. Under the generally accepted accounting principles (GAAP) that expire next December, Apple has been reporting revenues that are as much as $3.79 billion lower than its actual (non-GAAP) revenues. (See The day Apple released its iPhone revenue bomb.)
[Estimated Q1 2010 GAAP revenue in the chart above is the Street's consensus as reported by Thomson Financial. Q1 non-GAAP revenue is the consensus of estimates from the analysts we polled. Pre Q4 2008 non-GAAP estimates are courtesy of Bullish Cross's Andy Zaky.]
As expected, there is a wide discrepancy between the high and low estimates -- nearly $1.3 billion for GAAP revenues and more than $1.5 billion for non-GAAP. (See below the fold.)
But even the most bearish estimate, from Morgan Keegan's Tavis McCourt, has non-GAAP revenues growing nearly 18% year over year. The most bullish analyst, Broadpoint AmTech's Brian Marshall, is looking for better than 37% growth.
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Apple's gap is closing quickly
The opportunity to cash in on the iPhone's subscription accounting has mostly passed
Apple (AAPL) is scheduled to report its fiscal 2009 earnings next Monday, Oct. 19, and in the days ahead investors can expect to hear a lot about the new accounting rules that will allow Apple for the first time to book iPhone revenue when the sales occur, rather than spreading it out over eight quarters.
The effect of the MORE
Philip Elmer-DeWitt - Oct 11, 2009 8:34 AM ET -
Apple's 2009 earnings up nearly 44% under new accounting rules - analyst
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
Philip Elmer-DeWitt - Sep 24, 2009 7:08 AM ET
2010 EPS: $8.90, up from $6.00 -- a 48% MORE -
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
Philip Elmer-DeWitt - 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
Philip Elmer-DeWitt - 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
Philip Elmer-DeWitt - Sep 14, 2009 9:51 AM ET -
Apple's growing cash hoard
Two days before Apple's (AAPL) annual meeting -- the first in more than a decade that Steve Jobs won't attend -- Financial Alchemist's Turley Muller offers beleaguered shareholders a statistic that should provide some comfort:
Apple's cash holdings have grown at an annual rate of 50% (year-to-year) or more every quarter for the past two years. (link)
"Cash flow, not earnings, best reflects a firm's investment prospects," writes Muller in a post MORE
Philip Elmer-DeWitt - Feb 23, 2009 2:31 PM ET -
The day Apple released its iPhone revenue bomb
Some Apple watchers have complained almost since the launch of the iPhone that Wall Street doesn't understand the device's value to the company. Analysts consistently underestimate Apple's revenue, these investors insist, because they fail to fully account for iPhone sales.
The problem has been festering for so long -- and the gap has grown so large between Apple's actual earnings and the Street's grasp of those earnings -- that Apple finally MORE
Philip Elmer-DeWitt - Oct 23, 2008 5:36 PM ET
