New accounting rules at Apple book all iPhone revenue now
One major reason for Apple's huge boost in revenue is a small but significant change in accounting rules. When I bought AAPL last year, the company was booking revenue for iPhones over the period of the 24-month lock in, or roughly $25 per month per phone at $600 cost.
That very 'fair' approach ensured that revenue would grow steadily, with every new sale contributing to the bottom line for years to come.
But now, Apple reported $15.6BB in Q4, a huge bump up from the $11BB it reported this time last year. Sure, iPhone sales are booming. But really, Apple also took all $600 per phone and booked it in the quarter. That's a huge increase over $25 per phone that it would've otherwise booked.
In the art of IR, Apple also has leaked the iTablet, showing investors the next big thing and allowing them to forget the reasons for the huge increase.
Google, now having shown it is much less savvy when it comes to the art of the show, actually booked a similarly huge increase for Q4. But its stock took a nosedive, because people didn't see the increase as sustainable.
Too bad the Nexus One hasn't lept out of the gate with a bang. It's a great phone that shows how the interaction between apps is key to a streamlined experience. Something the iPhone ins't all that strong in.
That very 'fair' approach ensured that revenue would grow steadily, with every new sale contributing to the bottom line for years to come.But now, Apple reported $15.6BB in Q4, a huge bump up from the $11BB it reported this time last year. Sure, iPhone sales are booming. But really, Apple also took all $600 per phone and booked it in the quarter. That's a huge increase over $25 per phone that it would've otherwise booked.
Apple said its latest results were helped by new accounting rules that allow it to recognize all the revenue for iPhone sales at the time the phones are sold. Previously, it deferred such revenue over 24 months, or the length of time consumers are expected to use the handsets. the company also restated past periods to reflect this change.
In the art of IR, Apple also has leaked the iTablet, showing investors the next big thing and allowing them to forget the reasons for the huge increase.
Google, now having shown it is much less savvy when it comes to the art of the show, actually booked a similarly huge increase for Q4. But its stock took a nosedive, because people didn't see the increase as sustainable.
Too bad the Nexus One hasn't lept out of the gate with a bang. It's a great phone that shows how the interaction between apps is key to a streamlined experience. Something the iPhone ins't all that strong in.
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