Apple Posts 4Q 2008 Earnings Results

[rdowns]

Apple blows it out again

$1.26 EPS ($1.11 anticipated)

Revenue of $7.9 billion

2,611,000 Macs shipped. (below expectations)
11,052,000 iPods (above expectations)
6,892,000 iPhones (way above expectations)

$25 billion in cash.

OY, they provided very low guidance. Get ready for the stock to plummet.

Taking this from CNBC.

Link up
http://biz.yahoo.com/prnews/081021/aqtu138.html?.v=47

[NT1440]

edit: NVM i read that wrong.

Anyone got total iphone sales since debut?

[IJ Reilly]

I was guessing $1.22 and you were guessing $1.28. So you win on points!

[rdowns]

This is sweet. I hope Wall Street gets this.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone(TM) and Apple TV® over their economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $11.68 billion of "Adjusted Sales" and $2.44 billion of "Adjusted Net Income."

[rdowns]

AAPL up $1.83 after hours.

Shows you what I know.

[IJ Reilly]

Originally Posted by NT1440

Care to explain to a 17 year old what that means?

I just dont understand why a company that obviously is doing well is going to have their stock go down (then again i never seem to hear anything other than apples stock go down, even tho they seem to always be doing great).

It's their official forecast for the future quarter. The markets have been spooked by Apple's very conservative predictions for the future, even though they always do it.

Originally Posted by rdowns

AAPL up $1.83 after hours.

Shows you what I know.

After losing $7.00 during the day in a general tech selloff.

[Cinematographer]

Did I read that right?

6.892.000 iPhone units sold in Q4.

That's absolutely huge!!!

That's a increase of 861 % Y/Y

Remember the time the iPod took off like that?

[Unspeaked]

Originally Posted by IJ Reilly

The forecasted a wide range, from $1.06 and $1.35.

Yes, but the original estimates were for $1.66, so even the high end of the scale is well below that.

Originally Posted by rdowns

AAPL up $1.83 after hours.

Shows you what I know.

That's the last trade, but it's currently halted.

It will reopen trading at 5:10pm.


I think it's tough to predict how the street will read this call - up or down - especially in this market!

[IJ Reilly]

Originally Posted by Unspeaked

Yes, but the original estimates were for $1.66, so even the high end of the scale is well below that.

Where did you see that number?

[Tovenaar]

Originally Posted by rdowns

This is sweet. I hope Wall Street gets this.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone(TM) and Apple TV® over their economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $11.68 billion of "Adjusted Sales" and $2.44 billion of "Adjusted Net Income."

Hi, I used to be an auditor, so I know a little bit about this:
The reason GAAP exists is to protect investors from marketing mumbo jumbo such as this. Apple isn't allowed to account for these sales because they haven't earned them yet, and this money could potentially disappear with returns, or if people cancel their contracts. It's not unimaginable that an issue with the app store for example causes mass contract cancellations.

You were probably just referring to this for the sake of discussion. I just didn't want any readers to make decisions based on these numbers.

[IJ Reilly]

Originally Posted by Tovenaar

Hi, I used to be an auditor, so I know a little bit about this:
The reason GAAP exists is to protect investors from marketing mumbo jumbo such as this. Apple isn't allowed to account for these sales because they haven't earned them yet, and this money could potentially disappear with returns, or if people cancel their contracts. It's not unimaginable that an issue with the app store for example causes mass contract cancellations.

You were probably just referring to this for the sake of discussion. I just didn't want any readers to make decisions based on these numbers.

I don't claim to fully understand the accounting mumbo jumbo but they did say in the conference call that the non-GAAP numbers were estimates used for internal tracking purposes, and that they included projections for warranty return costs, etc. Also FWIW, contract cancellations come with penalties. So what I think Apple is trying to communicate here is that they'd still have a tremendous amount of revenue to book in future quarters even if they never sold another iPhone. That was news I could use.

[gnasher729]

Originally Posted by Tovenaar

The reason GAAP exists is to protect investors from marketing mumbo jumbo such as this. Apple isn't allowed to account for these sales because they haven't earned them yet, and this money could potentially disappear with returns, or if people cancel their contracts. It's not unimaginable that an issue with the app store for example causes mass contract cancellations.

That is actually not why revenues and cost are recorded over 24 months. The reason is that if revenues are recorded immediately, Apple would be going against SEC rules if they released any free updates for the iPhone and for the Apple TV. Remember when Apple charged customers the enormous sum of $2 to upgrade the wireless network on some MacBooks? They were forced to do this because doing it for free would have meant Apple broke the SEC rules.

Apple could very easily and completely legally record all the iPhone revenues at the time of sale. GAP rules mean Apple has to be reasonably sure to get their money. So if you could cancel a contract without penalty, money from that contract wouldn't be counted. If you could stop paying for a contract because you are bankrupt, Apple would have to make allowances for that and record only say 90% of the revenues. Customers cannot just "mass cancel" their contracts; they are binding contracts and they have to pay.

But doing this and recording revenues immediately would mean Apple cannot give free upgrades to iPhone customers. And it is a marketing decision that for the price of an iPhone, you get the phone with today's software and a reasonable expectation of free improvements over the phone's lifetime. You don't get these upgrades for free for the iPod Touch.

[gmanrique]

what we, the public, have been told, is that Apple chose to account this way, not that have to do it, to be able to still deliver product enhancements after the initial sale. This applies to the AppleTV even if there is no contract with it. The first gen iPhone was getting extra revenue on a monthly basis from AT&T so that revenue was at risk if the contract was cancelled by the user. The new iPhone 3G is subsidized by the Telcos and they pay full price (whatever that is) to Apple for the phones, but Apple still accounts for them in a 2 year period, even if they receive all the cash well before those 2 years. So, is this not true?

Originally Posted by Tovenaar

Hi, I used to be an auditor, so I know a little bit about this:
The reason GAAP exists is to protect investors from marketing mumbo jumbo such as this. Apple isn't allowed to account for these sales because they haven't earned them yet, and this money could potentially disappear with returns, or if people cancel their contracts. It's not unimaginable that an issue with the app store for example causes mass contract cancellations.

You were probably just referring to this for the sake of discussion. I just didn't want any readers to make decisions based on these numbers.

[mccldwll]

Originally Posted by Tovenaar

Hi,
Apple isn't allowed to account for these sales because they haven't earned them yet, and this money could potentially disappear with returns, or if people cancel their contracts.

Completely wrong. Not even close. Aapl has earned them. They are not contract based. The iPhone sales (and appleTV sales) are completed sales, not dependent on future contracts. It's cash in the bank. Aapl claimed with Gen1 that it decided to use subscription accounting since it would be upgrading iPhone during 2 year period of AT&T contract, and didn't want to get into having to charge for those upgrades like it does with the Touch. I have my suspicions that that was not the main reason, but that's beside the point. And all contract based income (such as monthly subsidies from Gen1 iPhone) is accounted for as received.

[mccldwll]

Well.....that about covers auditors, aapl and GAAP.

[BongoBanger]

Originally Posted by mccldwll

Completely wrong. Not even close. Aapl has earned them. They are not contract based. The iPhone sales (and appleTV sales) are completed sales, not dependent on future contracts. It's cash in the bank. Aapl claimed with Gen1 that it decided to use subscription accounting since it would be upgrading iPhone during 2 year period of AT&T contract, and didn't want to get into having to charge for those upgrades like it does with the Touch. I have my suspicions that that was not the main reason, but that's beside the point. And all contract based income (such as monthly subsidies from Gen1 iPhone) is accounted for as received.

No, he's right.

[IJ Reilly]

Originally Posted by rdowns

OY, they provided very low guidance. Get ready for the stock to plummet.

The forecasted a wide range, from $1.06 and $1.35.

[NT1440]

Originally Posted by rdowns

OY, they provided very low guidance. Get ready for the stock to plummet.

Care to explain to a 17 year old what that means?

I just dont understand why a company that obviously is doing well is going to have their stock go down (then again i never seem to hear anything other than apples stock go down, even tho they seem to always be doing great).

[rdowns]

Originally Posted by NT1440

Care to explain to a 17 year old what that means?

I just dont understand why a company that obviously is doing well is going to have their stock go down (then again i never seem to hear anything other than apples stock go down, even tho they seem to always be doing great).

Guidance is the amount of EPS (earnings per outstanding share of stock) they expect for the next quarter (October-December). Apple is notorious for giving low numbers which adversely affects its stock price. The price of the stock is what investors believe will happen in the future.

[MacRumors]

Apple announced their financial results today for the 4th quarter of fiscal 2008 . Apple posted revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share. These results compare to revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share, in the year-ago quarter. Gross margin was 34.7 percent, up from 33.6 percent in the year-ago quarter. International sales accounted for 41 percent of the quarter's revenue.

Apple shipped 2,611,000 Macintoshcomputers during the quarter, representing 21 percent unit growth and 17 percent revenue growth over the year-ago quarter. The Company sold 11,052,000 iPods during the quarter, representing eight percent unit growth and three percent revenue growth over the year-ago quarter. Quarterly iPhone units sold were 6,892,000 compared to 1,119,000 in the year-ago-quarter.

"Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone -- we sold more phones than RIM," said Steve Jobs, Apple's CEO. "We don't yet know how this economic downturn will affect Apple. But we're armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt."

Apple will provide live streaming of its Q4 2008 financial results conference call at a 2:00 p.m. PDT.

We will post highlights here.

Article Link: Apple Reports $1.14 Billion Profit for Q4 2008

[coachingguy]

Pretty Good in this economy!

[amac4me]

Can somebody saw Switchers? Apple continues to break prior Mac unit numbers. Clearly an indication of new Mac users. Nice job Apple.

[WoFat]

Stock's falling! We're all gonna die! Help me, Jeebus!

[Unspeaked]

Originally Posted by dongmin

Just to be clear, the $1.65 estimate is for the Oct.-Dec. quarter, not the July-Sept quarter which was in the $1.11 range.

Apple beat the consensus in earnings per share, but missed in total revenue.

Yes, of course.

They blew away estimates for the current quarter!

Originally Posted by hanschien

Steve Jobs: "We have the best customers in the world"!

...except those pesky ones that want FireWire on their MacBooks.

[hanschien]

Originally Posted by Unspeaked

Yes, of course.

...except those pesky ones that want FireWire on their MacBooks.

And matte displays.