Apple Q3 2007 Financial Results on July 25, 2007

MacRumors · Jul 23, 2007, 01:02 PM

Apple will be webcasting a discussion of their Q3 2007 Financial Results on Wednesday, July 25, 2007. As usual, the following disclaimer is given:

Quote:

Please note that comments made during this call may include forward-looking statements that are subject to risks and uncertainties, and that actual results may differ materially from these forward-looking statements. For more information on the factors that could influence results, please refer to Apple’s SEC filings.

The conference call begins at 2pm PT, 5pm ET.

Apple's 3rd financial quarter of 2007 began on April 1st and ended on June 30, 2007. While the iPhone was only on sale for 2 days during the quarter and those revenues will be spread over 24 months according to Apple's subscription based accounting system for iPhone and Apple TV, analysts believe strong Mac sales will lead to expectation-beating results (via AppleInsider's analyst coverage).

Article Link

Grimace · Jul 23, 2007, 01:18 PM

how the heck is the AppleTV spread over 24 months too? There is no contract, it's a completely separate product.

EDIT: huh, I guess that was an internal accounting shift from Apple. A subscription-based accounting scheme would imply something is in the pipeline for the AppleTV...

Peace · Jul 23, 2007, 01:21 PM

Quote:

Originally Posted by Grimace

how the heck is the AppleTV spread over 24 months too? There is no contract, it's a completely separate product.

EDIT: huh, I guess that was an internal accounting shift from Apple. A subscription-based accounting scheme would imply something is in the pipeline for the AppleTV...

Might be because the

TV and iPhone are a different part of Apple,Inc. apart from the computers accountingwise.

gnasher729 · Jul 23, 2007, 01:31 PM

Quote:

Originally Posted by Grimace

how the heck is the AppleTV spread over 24 months too? There is no contract, it's a completely separate product.

EDIT: huh, I guess that was an internal accounting shift from Apple. A subscription-based accounting scheme would imply something is in the pipeline for the AppleTV...

It mostly means Apple has the right to add functionality to existing AppleTVs without having to jump through ridiculous hoops like the $1.99 WiFi upgrade.

ajhill · Jul 23, 2007, 01:31 PM

Well, on Wednesday we should get the answers to three important questions:

1. How much does Apple get out of every monthly bill?

2. How many iPhones were sold?

3. How did the rest of the profit centers do during the quarter and was there a halo effect? I.e. was there significant erosion to the iPod market. If there wasn't, watch out. AAPL goes higher.

TheSlush · Jul 23, 2007, 01:34 PM

Quote:

Originally Posted by Grimace

A subscription-based accounting scheme would imply something is in the pipeline for the AppleTV...

Netflix-like movie rental subscriptions, perhaps?

sruthmann · Jul 23, 2007, 01:37 PM

Quote:

Originally Posted by Grimace

how the heck is the AppleTV spread over 24 months too? There is no contract, it's a completely separate product.

EDIT: huh, I guess that was an internal accounting shift from Apple. A subscription-based accounting scheme would imply something is in the pipeline for the AppleTV...

AppleTV is about to get movie rentals!!!

Squonk · Jul 23, 2007, 01:39 PM

Quote:

Originally Posted by sruthmann

AppleTV is about to get movie rentals!!!

Wouldn't that be nice! Are you speculating or are you SAYING there will be?

Dany M · Jul 23, 2007, 01:39 PM

Does anyone think this is going to be MORE then a financial conference....?

Have they ever done this before...?

Squonk · Jul 23, 2007, 01:40 PM

Quote:

Originally Posted by Dany M

Does anyone think this is going to be MORE then a financial conference....?

Have they ever done this before...?

No.
Nope.
Just the facts (& figures)

IJ Reilly · Jul 23, 2007, 01:40 PM

Quote:

Originally Posted by ajhill

1. How much does Apple get out of every monthly bill?

2. How many iPhones were sold?

Probably we're not going to get the answer to either of these questions. For one, the iPhone was released on the next to the last day of the quarter, and for another, I don't think Apple will ever reveal the inner-workings of their relationship with AT&T.

P-Worm · Jul 23, 2007, 01:57 PM

Quote:

Originally Posted by IJ Reilly

Probably we're not going to get the answer to either of these questions. For one, the iPhone was released on the next to the last day of the quarter, and for another, I don't think Apple will ever reveal the inner-workings of their relationship with AT&T.

I could see it going either way. I don't believe that they will talk about how much they make on monthly fees or anything that involves AT&T, but I wouldn't be surprised at all if they announced how many iPhones they have sold.

P-Worm

Teddy's · Jul 23, 2007, 02:00 PM

Quote:

Originally Posted by sruthmann

AppleTV is about to get movie rentals!!!

Meh, another thing that Canadians won't get until 2020...

Rocketman · Jul 23, 2007, 02:07 PM

Let's do some quick math.

2 days of iPhone sales and the related service contracts. Let's assume 500,000 iPhones. In the future, the actual figure might be less speculative, maybe even 700,000 based on AT&T's statement about over a million activations.About 2/3 of the phones at 8gb and 1/3 at 4gb, again speculative. Something like 1/2 existing AT&T customers and 1/2 new. Again speculating Apple gets $5 a month for existing and $11 for new.

167,000 4GB iPhones @ $500 @ 1/24 $3,479,166
333,000 8GB iPhones @ $600 @ 1/24 $8,325,000
250,000 ATT activations @ $5.00 $1,250,000
250,000 new activations @ 11.00 $2,750,000

Further assume a 100% margin on fees and a 50% margin on hardware sales.

Remember these are monthly figures so next quarter will have three times these values from sales from those two days alone.

Not bad for a couple of days

Rocketman

TPALTony · Jul 23, 2007, 02:13 PM

Quote:

Originally Posted by gnasher729

It mostly means Apple has the right to add functionality to existing AppleTVs without having to jump through ridiculous hoops like the $1.99 WiFi upgrade.

The right to add software features already exists in US GAAP. Macs are not accounted for over 24 months, neither are copies of Tiger. The problem with the 802.11n thing was that the HARDWARE was not what it was "sold" with. The spec sheet listed 802.11G, so to add N ability they have to account for it.

They could add software features (within the general remit of the original purpose) to Apple TV without having to play accounting games. But if they are going to add movie rentals etc. they might have to account for it differently.

Of course, accounting for it over 24 months also lets them show a large net loss on apple TV due to the R&D costs of the device which has it's accounting purposes too in terms of deferred taxes etc.

Also, under GAAP they aren't required to disclose WHY they choose to account for things a certain way, so I doubt we'll get any insight into this during the call...

t

IJ Reilly · Jul 23, 2007, 02:25 PM

Quote:

Originally Posted by P-Worm

I could see it going either way. I don't believe that they will talk about how much they make on monthly fees or anything that involves AT&T, but I wouldn't be surprised at all if they announced how many iPhones they have sold.

P-Worm

It could happen but of course Apple could make that announcement at any time. In the past, they've generally sent out special press releases to tout sales milestones. On the earnings announcements they usually stick pretty close to the required disclosures and refuse to answer most other questions.

fastbite · Jul 23, 2007, 02:37 PM

Quote:

Originally Posted by P-Worm

I could see it going either way. I don't believe that they will talk about how much they make on monthly fees or anything that involves AT&T, but I wouldn't be surprised at all if they announced how many iPhones they have sold.

P-Worm

I agree, they will not mention how much they get from AT&T, no way. And they will mention the number of iphones sold, IF the number is good. And of course I bet it is.

BKF · Jul 23, 2007, 02:44 PM

Interesting piece on Apple iPhone accounting and other aspects of the earnings report here:

http://blogs.business2.com/apple/200...-third-qu.html

dernhelm · Jul 23, 2007, 03:06 PM

Will Apple indicate the total number of iPhones sold to date? If so what will the number be?

My guess is no, they will not tell the exact number of iPhones sold to date. They will however indicate that more than 700,000 iPhones were sold in those 48 hours in June, that they surpassed 1,000,000 already and that they are "tracking well" towards 3,000,000 by the end of Sept.

My $0.02.

mathwhiz90601 · Jul 23, 2007, 03:18 PM

I'm thinking that this might not be your ordinary investor report. I think there'll be .....

NEW PRODUCTS!

iMac revised, mac Mini revised... awesome!

The timing is right and they sorely need a revision.

Rocketman · Jul 23, 2007, 03:21 PM

Quote:

Originally Posted by mathwhiz90601

I'm thinking that this might not be your ordinary investor report. I think there'll be .....

NEW PRODUCTS!

iMac revised, mac Mini revised... awesome!

The timing is right and they sorely need a revision.

The only "new product" that might be announced is a stock split.

Rocketman

Tampa Tom · Jul 23, 2007, 03:50 PM

All I can say is I'm SO happy I "gambled" (as my father said) with my share of my grandparents estate and bought 1000 Apple shares last July. My $53,000 is now worth $143,000.

PS. I'm selling before the conference call.

twoodcc · Jul 23, 2007, 03:59 PM

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU like Mac OS X; en) AppleWebKit/420+ (KHTML, like Gecko) Version/3.0 Mobile/1A543a Safari/419.3)

looking forward to hearing some good news

aafuss1 · Jul 23, 2007, 04:13 PM

I want to know if there'll be a question regarding the status of iLife and iWork updates?

ElvisNixon · Jul 23, 2007, 04:14 PM

TheStreet.com is reporting ATT is paying Apple between $150-200 per phone and $9 per month. If true cha-ching for Apple!

http://www.thestreet.com/_yahoo/news...&cm_ite=NA

Jul 23, 2007, 01:18 PM	#2
Grimace Contributor Join Date: Feb 2003 Location: with Hamburglar.	how the heck is the AppleTV spread over 24 months too? There is no contract, it's a completely separate product. EDIT: huh, I guess that was an internal accounting shift from Apple. A subscription-based accounting scheme would imply something is in the pipeline for the AppleTV... __________________ Canon 1Ds Mk III • Canon 5D MkII 16-35mm f/2.8L II • 24-70mm f/2.8L • 70-200mm f/2.8L IS 50mm f/1.2L • 85mm f/1.2L • 135mm f/2L • 300mm f/2.8L IS

Jul 23, 2007, 01:31 PM	#5
ajhill macrumors 6502 Join Date: May 2007	Looking forward Well, on Wednesday we should get the answers to three important questions: 1. How much does Apple get out of every monthly bill? 2. How many iPhones were sold? 3. How did the rest of the profit centers do during the quarter and was there a halo effect? I.e. was there significant erosion to the iPod market. If there wasn't, watch out. AAPL goes higher.

Jul 23, 2007, 02:07 PM	#14
Rocketman macrumors 68020 Join Date: Dec 2001 Location: Claremont, CA	Let's do some quick math. 2 days of iPhone sales and the related service contracts. Let's assume 500,000 iPhones. In the future, the actual figure might be less speculative, maybe even 700,000 based on AT&T's statement about over a million activations.About 2/3 of the phones at 8gb and 1/3 at 4gb, again speculative. Something like 1/2 existing AT&T customers and 1/2 new. Again speculating Apple gets $5 a month for existing and $11 for new. 167,000 4GB iPhones @ $500 @ 1/24 $3,479,166 333,000 8GB iPhones @ $600 @ 1/24 $8,325,000 250,000 ATT activations @ $5.00 $1,250,000 250,000 new activations @ 11.00 $2,750,000 Further assume a 100% margin on fees and a 50% margin on hardware sales. Remember these are monthly figures so next quarter will have three times these values from sales from those two days alone. Not bad for a couple of days Rocketman __________________ Think Different-ly! Looking for an iPhone dev with way too much time on her hands for BASIC programs I have.

Jul 23, 2007, 02:44 PM	#18
BKF macrumors member Join Date: Apr 2006 Location: Brooklyn, NY	More reading -- Interesting piece on Apple iPhone accounting and other aspects of the earnings report here: http://blogs.business2.com/apple/200...-third-qu.html

Jul 23, 2007, 03:06 PM	#19
dernhelm macrumors 65816 Join Date: May 2002 Location: middle earth	We need a poll Will Apple indicate the total number of iPhones sold to date? If so what will the number be? My guess is no, they will not tell the exact number of iPhones sold to date. They will however indicate that more than 700,000 iPhones were sold in those 48 hours in June, that they surpassed 1,000,000 already and that they are "tracking well" towards 3,000,000 by the end of Sept. My $0.02. __________________ Five exclamation marks, the sure sign of an insane mind. --Terry Pratchett

Jul 23, 2007, 01:39 PM	#9
Dany M macrumors 6502 Join Date: Jun 2007 Location: Earth	Does anyone think this is going to be MORE then a financial conference....? Have they ever done this before...?

Jul 23, 2007, 03:18 PM	#20
mathwhiz90601 macrumors 6502 Join Date: Jul 2007 Location: SoCal... wannabe Canadian	I'm thinking that this might not be your ordinary investor report. I think there'll be ..... NEW PRODUCTS! iMac revised, mac Mini revised... awesome! The timing is right and they sorely need a revision. __________________ iMac 2.4 GHz C2D 320GB HDD 1GB RAM Mac OS X (finally after 7 years!)

Jul 23, 2007, 03:50 PM	#22
Tampa Tom macrumors member Join Date: Jun 2007 Location: Tampa Bay Area	All I can say is I'm SO happy I "gambled" (as my father said) with my share of my grandparents estate and bought 1000 Apple shares last July. My $53,000 is now worth $143,000. PS. I'm selling before the conference call.

Jul 23, 2007, 03:59 PM	#23
twoodcc macrumors 603 Join Date: Feb 2005 Location: Right side of wrong	Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU like Mac OS X; en) AppleWebKit/420+ (KHTML, like Gecko) Version/3.0 Mobile/1A543a Safari/419.3) looking forward to hearing some good news __________________ tville pump Smarter than the average bear

Jul 23, 2007, 04:13 PM	#24
aafuss1 macrumors 68000 Join Date: May 2002 Location: Gold Coast, Australia	I want to know if there'll be a question regarding the status of iLife and iWork updates? __________________ A.A.'s Mac mini-Core Solo 1.5 GHz,2GB, 60GB,Mac OS X 10.6 iPods:touch 32GB,5th gen 30GB, shuffle 2nd gen 1GB, shuffle 3rd gen 4GB, nano 1st gen 2GB, nano 3rd gen 4GB, nano 5th gen 8GB

Jul 23, 2007, 04:14 PM	#25
ElvisNixon macrumors newbie Join Date: Jun 2005	TheStreet.com is reporting ATT is paying Apple between $150-200 per phone and $9 per month. If true cha-ching for Apple! http://www.thestreet.com/_yahoo/news...&cm_ite=NA

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