Apple's Shady Accounting Practices

Discussion in 'General Mac Discussion' started by keysersoze, Mar 24, 2004.

  1. keysersoze macrumors 68000


    Jan 6, 2004
  2. mikeyredk macrumors 65816

    Mar 13, 2003
    buzzing though it i found it not an accounting issue but a marketing issue they are selling products to resellers for a much higher price then the apple store

    again this is from flash read

    and i find no fault of apple so they cost sell products at a much lower cost to their stores which they probably have negotiated in the previous contract remember how outraged the stores where

    just a question the answer might change my opinion

    who owns the apple stores is it individuals or apple corp.
  3. leftbanke7 macrumors 6502a


    Feb 4, 2004
    West Valley City, Utah
    My only concern with this whole thing is this:

    "Apple has been cheating us and the dealers for years. It is no surprise to me that Apple is doing the same thing to Apple shareholders," said Elite's Thomas Armes

    If somebody is cheating you, regardless of who it is, why do you even stay in business with them?
  4. Dippo macrumors 65816


    Sep 27, 2003
    Charlotte, NC

    In my opinion it is all just a ploy to try and get better wholesale prices for themselves.
  5. kuyu macrumors 6502a


    Sep 16, 2003
    This isn't really a big deal. Apple is selling to their own stores at cost, while selling to resellers at a margin. This makes the retail stores appear more profitable, but Apple's bottom line won't change.

    Apple's long run strategy is to take out the middle men (resellers) but still charge the same for the systems. Thus, the resellers profits become apple's profits. It's a bit "hard-ballish", but not in any way illegal.

    Apple still sells the systems to it's self for the same as retailers, but Apple Inc. takes the difference at fy end instead of a POS. By making the stores seem more profitable, apple can spur investors to rally behind news of retail expansion, all the while sheltering the retail stores under Apple's LIFO tax advantage.

    Raise income on paper, keep taxes the same. It's actually quite a brilliant business move. Congrats Apple.
  6. themadchemist macrumors 68030


    Jan 31, 2003
    Chi Town
    You guys are missing the point. This IS a big deal. If the allegations are true, Apple lied to its shareholders. It said that Apple Stores and resellers get products at the same price so that shareholders can assess the profitability of Apple Stores based on prevailing market conditions. If Apple is shifting profits and losses around (taking a manufacturing hit to boost retail), then it is unfairly projecting the state of its operations. While the overall picture is the same, it is not the full picture.

    Many investors might be staying with Apple because they see strength in a profitable retail chain...What if that's not true?

    Misleading investors in SEC filings is illegal and, of course, dishonest. This is a pretty big deal, in my opinion.

    Moreover, the sort of pricing discrimination involved is sketchy, at best. Since the Apple Stores are an arm of Apple, it might not be outright illegal pricing discrimination. But again, it is at least borderline legal.

    No, guys, this is a serious matter. Not only do your books need to add up, but each subtotal needs to add up, as well.

    We'll see whether the allegations are true or false, but consumer confidence in Apple will certainly drop over the coming days and weeks. Expect to see the share price fall noticeably.
  7. yamabushi macrumors 65816


    Oct 6, 2003
    I wouldn't get too upset about this. Every large corporation makes accounting decisions that will benefit the company. There is actually a great deal of flexibility in many areas. If shareholders would prefer a different accounting method they can certainly voice their opinion but this does not mean that the current method is inherently misleading. There are legitimate reasons for the reported wholesale costs to differ from internal costs. As an investor I would be interested in a detailed and accurate description of all costs to be sure. However I would be much more concerned about other things such as inventory turnover and the apparent effectiveness of marketing expenses in creating sales.
  8. Flowbee macrumors 68030


    Dec 27, 2002
    Alameda, CA
    Apple closed at a 52 week high today ($28.37). Glad you're not my stockbroker. :p
  9. Jeewhizz macrumors regular

    Nov 30, 2003
    London, UK
    You guys need to chill :)

    I just bought a 15" PB here, and it cost me £1600 - about US$2940 (as per

    The same PB from the states costs US$2167.00 :eek:

    For reasons i don't know why, but mac's are so much more expensive over here than in the US :(
  10. rainman::|:| macrumors 603


    Feb 2, 2002
    seriously, apple is screwed if this is true. Not only have they lied to their stockholders, the SEC could bring them up on a dozen additional charges including rackateering. This is not something that will blow over in the next few days, there could be some lengthy investigations and trials here. I don't care that some of you interpret this as "it wasn't misleading", in the legal sense it most certainly was and Apple will have to face the music for breaking several laws, again if this is all true.

    The SEC does not fool around with these laws, they strictly enforce them. Conspiracy, fraud, none of it's going to be good. Expect Apple stock to really start slipping at the beginning of a trial, if there is one.

  11. humantech macrumors member

    Jan 27, 2002
    Inland northwest
    Speaking of poor journalism and opportunistic media...

    Just an insider point fo view-
    I am an Apple specialist- I just got back from meetings with Apple- I've only been doing this ( the retail specialist part) for about 4 years, but I have made a few observations-
    1) thinksecret is the worst kind of opportunistic media source. They are very one sided- They exist only to throw out bad press and reap the traffic to thei rsite because of it- I have corresponded with Nick Deplume ( thinkecrets lead writer) and given him multiple accounts of how Apple has done great things for me and my store, and never ONCE has this or any other positive shred of news ever hit his site.
    2) The folks involved with the lawsuit against apple ( the apple specialist suit) are the most diverse section of "good ol boys" I have ever seen. Think of it this way- These guys WERE Apples cream of the crop distribution channel with NO competition for 20 + years. What did they do with marketshare? Any one? Now, Apple FINALLY takes it into their own hands to grow market share, and these guys whine. They dig in Apples trash to find receipts for merchandise that could be sent in on promo, or advanced to the stores as a low cost DEMO ( which BTW, we specialists also get) and then without any clarification from Apple use thinksecret and other "enquirer" rags of the mac persuasion to get them published to pressure Apple.

    3) Apple isnt a perfect company to work with, but they have taken good care of me and most other specialists - While there are always issues to resolve ( as in anything), they help me to feed my family, my employees, their families and all the local businesses that RELY on their high quality merchandise-

    4) Apple is NOT out to close the Specialists down. They are out to grow marketshare and insure they are around long term- IF the specialists wont do it, They will do it themselves ( which, BTW, is WHY Apple stores opened in the first place)

    5) Apples higher ups that I have met are extremely honest, forthcoming and intelligent individuals. They are people too. Its not "APPLE" as a thing- Apple is a Large, coordinated effort by real people.

    6) Apple is getting ready to blow up and the pie will be bigger than it has EVER been since the glory days in the first few years of computing-

    check out more about us specialists at
    ( Shameless plug)

    As always, my 2 cents
  12. Fukui macrumors 68000


    Jul 19, 2002
    It makes me nervous because something sneaky like this feels a little "steve" like if you know what I mean. Its not illegal to give yourself better pricing, its just that if they did, they lied to SEC, then the SEC will make martha stewart look like nothing in comparison.

    BUT, just because someone says something and makes allegations doesn't mean its true, and why would Andreson (the accounting guy) or whatever the guy's name is let this happen? Like the guy above said, if he's right, there are probably some few people who are losing thier monopoly (not like I have a problem with that!).
  13. Flowbee macrumors 68030


    Dec 27, 2002
    Alameda, CA
    This is getting blown waaay out of proportion. A few internal invoices is *not* proof that Apple is accounting for Apple Store sales any differently than its resellers. Consider the source of the charges (disgruntled resellers). As I pointed out above, investors have not found this 'story' to be credible. We'll see if the issue is addressed during the conference call on the 14th.
  14. ftaok macrumors 603


    Jan 23, 2002
    East Coast
    You have to compare prices without the taxes added.

    The US price you quoted is without sales tax. Many states in the US charge a sales tax. I would think the average is about 6%.

    What is the VAT in the UK right now? Take that out of the equation and compare the prices.

    It'll still probably be more expensive in the UK, but by how much?

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