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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: billcasto who wrote (63608)	4/26/2007 12:15:45 AM
From: aaplfan	Respond to of 213177

Also, what are the benefits of spacing out revenue recognition on the different products? The most obvious benefit is that it would begin to smooth out historically seasonal earnings which the street would love (provided the analysts don't try to extrapolate them back out which it sounds like they'll try to do anyways)

To: billcasto who wrote (63608)	4/26/2007 12:25:34 AM
From: Sr K	Read Replies (1) \| Respond to of 213177

To me the revenue recognition straightline over 24 months has one message: they are going to get a share of monthly revenue on the iPhone. This is a surprise, to have it confirmed. Secondly, Microsoft has done this, recording deferred revenue due to warranty and other service costs (Auto Update, updates, generally). But it is an accounting choice. What was interesting is that Apple is using this accounting (for related COGS, too) for Apple TV. So it seems it applied already to Q2, but no one asked the impact. So there is an argument to better match revenue with costs, as variable revenue comes in after the product purchase. This used to be called smoothing, and GE and others were criticized, ~ 2000, for managing earnings by using reserves and one-time gains. Now the rules are stricter, but the bottom line is that Q3 will show almost no iPhone revenue. And, accessories revenue will be recognized immediately.