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Apple 4Q 2007 Results, Conference Call: $6.22 billion revenue, $904 million profit

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.
 
Schtumple said:
3 negatives, are you kidding me?!?!
Click to expand...

maybe some people don't like seeing how much profit Apple are making on us...

or maybe some people don't want the mac market-share to grow so much, since the most used OS, is the one thats targeted most by hackers. And with higher productions volumes, less quality seems to come through..

but that could be someone's opinion.
 
Sbrocket said:
I admit, that's a lot in cash reserves to just leave sitting there. I wonder if they're planning something for it.
Click to expand...

Rocketman said:
They use it for prepayments to vendors to get level memory and CPU chip pricing and early access to volume shipments.

Good for everyone. This sales growth needs to be funded with a huge goods in process float.

Rocketman
Click to expand...

Rocketman has a point, but keep in mind that the cash doesn't just sit there... Apple can (and does) invest it and make money off of it. Just think of what 15 billion in the bank will get in interest ;)
 
macshark said:
It looks like Apple is using the "deferred revenue" trick to under-report the revenue and profits for a stellar quarter.
Click to expand...

There's no trick. Apple has publicly announced many times that they were moving to subscription-based financial reporting for its Apple TV and iPhone product lines. This was mainly so that they can provide software updates with increased functionality without running afoul of the Sarbanes-Oxley Act and having to charge for it à la 802.11n enabler.
 
33% margins... and yet the Leopard Edu pricing is almost doubled.

WAY TO GO $TEVE!
 
Re: Classic Support

pubwvj said:
Without Classic support and G3 support we have a load of Macs we don't bother upgrading. They still do their job fine.
Click to expand...

Seriously, then just don't freaking upgrade to Leopard.

If you have data locked up in OS 9-only formats, it's your own damn fault. You've known for 6 years that OS 9 was a dead-end OS, and mitigation strategies for continued access of that data should have been in place years ago. There's simply no excuse.

Educational software is admittedly a bigger problem, but again, you've known for 6 years that you need to find replacements. And of course, Apple isn't forcing you to upgrade to Leopard, so you can conceivably continue to run your Classic-only applications for the foreseeable future (as long as your Macs don't break).

But chiding Apple for not supporting a 6-year old OS is pretty whiny. And, as pointed out, this doesn't really have anything to do with the quarterly results.
 
Darn.. sorry guys. It already started. We all missed it. Apple employee I talked to said it started ages ago..... or he could have been kidding but I doubt that.
 
Useless idiots. You'd think they could get the webcast to work properly.

Clowns.
 
simX said:
There's no trick. Apple has publicly announced many times that they were moving to subscription-based financial reporting for its Apple TV and iPhone product lines. This was mainly so that they can provide software updates with increased functionality without running afoul of the Sarbanes-Oxley Act and having to charge for it à la 802.11n enabler.
Click to expand...

Now to invest that 15 billion into getting that POS Act repealed ;) ;)
 
frustrating absence...

i've interrupted a 3-day drive to hear the qtrly report...persuaded a very nice hotel manager to let me spend a couple hours in her lobby listening to it, sharing her free coffee. But nothing at the link...nada. Can anyone confirm whether it's started yet, or whether it IS apple's intent to webcast it?
 
macshark said:
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.
Click to expand...

I dare say you're rather quick to allege earnings management "tricks" simply on the basis of the presence of deferred revenues. For revenues to be recognized as such, rather than deferred, they must be both earned and either realized or realizable as cash. When the revenue is earned and when it is considered to be realizable are very complex accounting questions that differ greatly from company to company.
 
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