What is the hidden gem behind all these numbers is the "deferred revenue".
If you look at the financial statements:
http://images.apple.com/pr/pdf/q407fin_statements2.pdf
There is more than 1.4 billion dollars worth of "current" deferred revenue. 346 million of this is from "iPhone and Apple TV". Anyone knows what is the source of the 634 million dollars of the "other" deferred revenue?
Now let's look at the summary data from Apple website:
http://images.apple.com/pr/pdf/q407data_sum.pdf
Check out the line for "iPhone related products and services" near the bottom. It shows 1,119 million units sold, but the total recognized revenue is only $118 million! Apple is recognizing only $100 revenue per iPhone sold last quarter, despite the fact that they were getting additional incentives (~$150 according to the rumor mill) from AT&T.
It looks like Apple is using the "deferred revenue" trick to under-report the revenue and profits for a stellar quarter. The actual revenue would have been close to $7 billion and profits would have been in excess of a billion without revenue deferral.
Revenue deferral will most likely help balance out a few potential "not-so-great" quarters in the future (if that is possible) by spreading the loot from stellar quarters (like the current one) evenly over a longer period of time.
Bottomline: Last quarter was actually much better than what the top-level numbers in the earning release says. It will be interesting to hear the questions from analysts in the conference call.
If you look at the financial statements:
http://images.apple.com/pr/pdf/q407fin_statements2.pdf
There is more than 1.4 billion dollars worth of "current" deferred revenue. 346 million of this is from "iPhone and Apple TV". Anyone knows what is the source of the 634 million dollars of the "other" deferred revenue?
Now let's look at the summary data from Apple website:
http://images.apple.com/pr/pdf/q407data_sum.pdf
Check out the line for "iPhone related products and services" near the bottom. It shows 1,119 million units sold, but the total recognized revenue is only $118 million! Apple is recognizing only $100 revenue per iPhone sold last quarter, despite the fact that they were getting additional incentives (~$150 according to the rumor mill) from AT&T.
It looks like Apple is using the "deferred revenue" trick to under-report the revenue and profits for a stellar quarter. The actual revenue would have been close to $7 billion and profits would have been in excess of a billion without revenue deferral.
Revenue deferral will most likely help balance out a few potential "not-so-great" quarters in the future (if that is possible) by spreading the loot from stellar quarters (like the current one) evenly over a longer period of time.
Bottomline: Last quarter was actually much better than what the top-level numbers in the earning release says. It will be interesting to hear the questions from analysts in the conference call.