Comments on: Apple Changes Retail Accounting Rules http://www.ifoapplestore.com/db/2007/07/25/apple-changes-retail-accounting-rules/ news and information about Apple Inc.'s retail stores Sun, 06 Jul 2008 06:52:40 +0000 http://wordpress.org/?v=2.5.1 By: mark http://www.ifoapplestore.com/db/2007/07/25/apple-changes-retail-accounting-rules/#comment-10956 mark Sat, 28 Jul 2007 15:39:04 +0000 http://www.ifoapplestore.com/2007/07/25/apple-changes-retail-accounting-rules/#comment-10956 To zoetmb: Apple said they are reporting revenue over the 2-year term for the iPhone hardware. The AT&T subscriber payment will be expensed in the quarter they receive it and could last longer than 2 years. The reason for the iPhone (and AppleTV) hardware 2-year revenue reporting is that Apple plans to offer free software upgrades, not just bug fixes but new features. It seems they believe this is the best way to stay in compliance with the Sarbanes-Oxley Act. To IFO: Thanks. So because of the deferred revenue for not only the hardware products but also AppleCare/ProCare/One-to-One services, Apple's results are really even better than they seem to be. To zoetmb: Apple said they are reporting revenue over the 2-year term for the iPhone hardware. The AT&T subscriber payment will be expensed in the quarter they receive it and could last longer than 2 years. The reason for the iPhone (and AppleTV) hardware 2-year revenue reporting is that Apple plans to offer free software upgrades, not just bug fixes but new features. It seems they believe this is the best way to stay in compliance with the Sarbanes-Oxley Act.

To IFO: Thanks. So because of the deferred revenue for not only the hardware products but also AppleCare/ProCare/One-to-One services, Apple’s results are really even better than they seem to be.

]]> By: zoetmb http://www.ifoapplestore.com/db/2007/07/25/apple-changes-retail-accounting-rules/#comment-10803 zoetmb Thu, 26 Jul 2007 21:56:07 +0000 http://www.ifoapplestore.com/2007/07/25/apple-changes-retail-accounting-rules/#comment-10803 Yes..revenue reported for .Mac and Apple Care will be lower. This is taking a very conservative approach towards revenue. When I was in a CD-ROM subscription business, the accountants made us do the same thing - we had to book the revenue monthly over the course of the subscription term even though we got paid up front and the customers couldn't cancel and get a refund. This is also the same as what they're doing for the iPhone- reporting revenue over the 2-year term, although I'm unclear whether they're doing that just for the subscriber cut they get from AT&T or for the iPhone hardware as well. I understand it for the subscriber cut, but I don't see why they can't take all the revenue for the phone up front. But Apple may see some advantage to evening out the revenue over time - Wall St. may like that better. Yes..revenue reported for .Mac and Apple Care will be lower. This is taking a very conservative approach towards revenue. When I was in a CD-ROM subscription business, the accountants made us do the same thing - we had to book the revenue monthly over the course of the subscription term even though we got paid up front and the customers couldn’t cancel and get a refund.

This is also the same as what they’re doing for the iPhone- reporting revenue over the 2-year term, although I’m unclear whether they’re doing that just for the subscriber cut they get from AT&T or for the iPhone hardware as well. I understand it for the subscriber cut, but I don’t see why they can’t take all the revenue for the phone up front. But Apple may see some advantage to evening out the revenue over time - Wall St. may like that better.

]]> By: mark http://www.ifoapplestore.com/db/2007/07/25/apple-changes-retail-accounting-rules/#comment-10797 mark Thu, 26 Jul 2007 20:11:56 +0000 http://www.ifoapplestore.com/2007/07/25/apple-changes-retail-accounting-rules/#comment-10797 Couple of questions: 1. Did this new accounting begin with the June quarter? [IFO -- The April-May-June quarter uses the new accounting method.] 2. Under the new accounting for .Mac and AppleCare, overall revenue reported for the quarter will be lower than would've been reported under the old accounting; is that right? In other words, the software and services line for this quarter is less than what it would've been under the old system. Is that right? [IFO -- Correct.] Couple of questions:
1. Did this new accounting begin with the June quarter? [IFO -- The April-May-June quarter uses the new accounting method.]
2. Under the new accounting for .Mac and AppleCare, overall revenue reported for the quarter will be lower than would’ve been reported under the old accounting; is that right? In other words, the software and services line for this quarter is less than what it would’ve been under the old system. Is that right? [IFO -- Correct.]

]]> By: JoeB http://www.ifoapplestore.com/db/2007/07/25/apple-changes-retail-accounting-rules/#comment-10765 JoeB Thu, 26 Jul 2007 10:47:15 +0000 http://www.ifoapplestore.com/2007/07/25/apple-changes-retail-accounting-rules/#comment-10765 ugh, fu*king metrics. ugh, fu*king metrics.

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