“This quarter, Apple’s (AAPL) earnings failed to impress investors,” Stephen Rosenman writes for Seekign Alpha. “Wall Street promptly hurled it off a cliff…”
MacDailyNews Note: Apple’s record earnings were impressive to most; it was Apple’s Q2 08 guidance that failed to meet the Street’s expectations.
“But, wait. What if I told you that Apple forgot to enter 2 of the 2.3 million phones it sold this quarter, that they just skipped them, took the dough, are using it and just left it plain – well- out of the net income? Well, they did. They ‘deferred’ them,” Rosenman writes. “Apple’s earnings are far more impressive when you consider that their iPhone and [Apple TV] numbers are largely not entered in when they are sold. Rather, Apple stretches the revenues out over a two year period, only entering 1/8 of them each quarter.”
“Over the next two years, most of 3.288 billion dollars of deferred revenues will drop effortlessly to the bottom line. If Apple decided, quite legitimately, it could have taken those 816 million dollars as earnings this last quarter. Instead of 1.58 billion dollars, it easily could have logged 1.58 + 0.816, or 2.396 billion dollars, or about $2.65 a share. If they had reported that number — $2.65 a share — which is real net income earned, the stock price would be up to 230 rather than dropping to 130,” Rosenman writes.
“The earnings are there. They are real. They will be logged in over the next 7 quarters. The street needs to understand that Apple is reporting their earnings differently than most other companies and by doing so their explosive growth is vastly understated. There is nothing disappointing about this quarter. Au contraire, it is a blow-out,” Rosenman writes.
Full article here.
I had a blow-out the other day. I am better now.
Still wouldn’t matter. Some one on Wallstreet has an ax to grind.
It looks like some of the dolts on wall street are getting a remote wiff of a clue. Too bad it needs to be written with a crayon.
Well tires blowout too, then cause accidents.
There is a few problems that Apple needs to address.
1: The iPhone by far is not complete, it was rushed into design and not completely thought out. Hopefully iPhone II will change all that. By the way where’s the storage?
2: MacBook AIr, what the fsck was Apple thinking by raising the bar so far during a US recession? All this can result in is in poor sales and reflects on the stock price.
3: Cheap looking glossy screens are turning off buyers in the Apple Stores. Iv’e been to dozens, it’s always the same thing. Reflections are a problem.
4: Time Machine and Time Capsule, two poor ways to back up data because neither is bootable. If your going to bother to backup, might as well clone the whole darn drive so in case yours suffers a hardware failure, the time to having a fully functinal machine with all the updates, drivers and software is just a simple option boot away. Carbon Copy Cloner is free and allows timed clones.
Apple needs to get “with it” again. Because quite frankly the love and lust is wearing off with most of the public.
Apple is in danger of stalling.
and want in big time
they scared morons out of their money now they buy it hand over fist
fu america go start more war
Totally right. Any chance its Microsoft trying to find a way to spend billions to sink Apple.???
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Actually Apple is in a special situation. The defered revenue will continue to become a thicker and thicker revenue stream as iPhones sell. Even if iPhones slow down selling, that revenue stream will continue for years, adding to Apples bottom line.
And even then clueless analysts will continue to waste time and energy writing about things for which they have no Clue. LOL
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“1: The iPhone by far is not complete, it was rushed into design and not completely thought out. “
OK, aisde from SDK not being ready, which no doubt they DID have planned all along (i.e. ‘thought it out) please give examples of how the iPhoe was not thought out. Don’t give a features list of things you want to see that are missing because they probably will show up there.
Talk about the features that are included that arent thought out.
Deferred earnings is a way to covers one´s butt when you know the next quarters are going to suck.
This is why Apple´s stock dropped….so much.
Apple is trying to prop up weak future sales (they know what demand is) by deferring this old revenue until later to make the next quarters look better than they really are.
If Apple knew that the next 3 quarters were going to be blow out sales with a new product(s) they wouldn´t be deferring revenue.
What did Apple have to introduce at MacWorld? Nothing much as far as effecting the bottom line. AppleTV: an admitted loser by Apple is going through a new reincarnation.
MacBookAir: a product for a very select few.
Apple forgot to introduce new product for the masses.
(It´s like – Apple had one whole year since the previous MacWorld and all Apple did was introduce two lame (to the bottom line) products?)
Plus Steve blew it when the stock was around $200 and did not split the stock.
And remember, as nice as the increase in Mac sales are, that today for every 100 computers sold only 5 or 6 will have the Apple name on them.
@ Macfanboy
Deferred earnings are needed for the iPhone and TV because that allows Apple to release FREE software updates that add NEW capabilites without getting into trouble.
See the Sarbanes-Oxley Act of 2000.
Dam non-editing.
Sarbanes-Oxley Act of 2002.
Deferring earnings can be a smart long-term strategy, especially when you have a knockout quarter in the tech sector. Having the stock soar above $200 isn’t going to help when subsequent reports won’t (can’t possibly) be as good and the stock nose dives.
The way the phones were reported will ultimately benefit investors.
Splits have no purpose and make no difference.
so you’re telling me that the stock went down by almost 1/2 because of a little misunderstanding?? Yeah right… It’s bullshit and we all know it
I think this Mary-Kate Olsen’s fault and the SEC should interview her.
Just my $0.02
Ooh nasty brockers…! Pulling the APPL at its lowest… just to buy some more and make even bigger profits when the values will obviously climb to the sky, once everybody will have understood that Apple is really that way up there!
To Macfanboy who said “Apple had one whole year since the previous MacWorld and all Apple did was introduce two lame (to the bottom line) products?)”
From the two Macworlds’ apple has introduced the iphone, Apple TV (1&2;), revamp imacs, the ipod touch, revamp “classic” ipods, the video ipod nano, revamped 8 core Mac Pros, DRM free tracks on itunes, Movie Rental, a whole host of software including the little tidbit called Leopard.
Apple does NOT release all it’s new products in the Jan. Macworld as countless PC weighted reviewers, articles and fanboys seem to think.
wannabe –
Splits have a very specific purpose – reward current investors with more stock at no cost, while at the same time splitting the price in half (if it’s a 2 for 1 split), encouraging new investment in the company.
@Old Mac Man.
“There is a few problems that Apple needs to address.”
That depends on what ‘is’ is.
You’re missing the fact that manufacturing costs are expensed over the straight 24 month period as well. Margins on the defferred REVENUE (not earnings) will be higher than most revenue since all non-manufacturing costs, such as R&D;are expensed as they occur. You just need to subtract out the cost of the hardware.
@Drew_III
Stock splits really do NOT serve any purpose. You are not getting any additional ownership through a stock split. You end up with the same exact sthing you had before. 100 shares at $200 = $20,000. 200 shares at $100 still = $20,000. Think of it this way. If you have 5 $20 bills, you have $100. If I was to split them for you and give you 10 $10 bills, you would have more “money”, but you wouldn’t have any more money. Holding more bills or more shares may feel cool, but doesn’t change anything.
As for encouraging new investment, most investment is done by large institutions such as Endowments, Pensions, Mutual Funds, etc. They could care less what the share price is. They are working in millions and billions of dollars. The only group that thinks that way are small retail investors, a small slice of the overall pie. Again though, Apple or any stock is just as “affordable” pre-split as after. If I only have say $20,000 to invest, I can get 100 shares of Apple @ $200 or after a split, 200 shares @ $100. Either way, my investment is $20,000, the EXACT SAME!
I’ve emerged from the Reality Distortion Field! Old Mac Man, I totally agree with you!
1: The iPhone by far is not complete — Exactly! Apple should have skipped the 1984 Mac, kept selling the Apple ][, and waited until they had developed the Intel Macs and Tiger before releasing the Mac. That would have been Killer!
2: MacBook AIr, [released] during a US recession? — Another dumb move. Apple should have scaled back their innovation during the dot.com bubble burst just like Dell and Microsoft, then they’d have even more money in the bank!
3: Cheap looking glossy screens — A real shot to the foot! The real reason laptop and desktop sales have been declining!
4: Time Machine and Time Capsule … neither is bootable. — You’ve hit the nail on the head! Considering how many hard drive failures I’ve had, a bootable back up is much more important to me than recovering the occasional presentation for work or the photos of my sister’s wedding I happen to accidentally delete. My boss and sister totallly understand.
@Old Man
How wrong can you be. The iPhone has the highest satisfaction ratings for any phone, period. That data has been published in the last few months.
Also remember what Jobs has said in the past. Apple skate to where the puck will be not where it is now. The MB Air is an excellent replacement for the 12 inch PB. It is designed for the frequent traveller plus it is also pushing the envelope in what a computer can be.
I’ve been backing up my PB via wireless using Time Machine. Then this weekend I decided to wipe the computer and reinstall everything. After setting up TM again and doing the initial backup overnight, I discover that TM recognized the old backups which are available to me if I need something I had deleted.
That type of behavior is pure magic. I’ve used other programs like retrospect and always have problems because if something goes wrong the whole backup can be invalid.
I’ll pass on the glossy screen. This is where Apple wants to go and in my opinion they are usually correct.
SOX is only part of it, less than stellar growth in iPhone and Apple TV sales is another part, low expectations for the coming year – no great new products predicted – round out the problems. If you believe it. I believed a $200 stock, worth more like $150, crashed to ~$130 … an opportunity! SOX accounting will feed the kitty for two years, minimum, the iMac will get a Core 2 Quad processor, and the Apple TV just doesn’t matter that much. I’m hoping Bento gets folded into iWork’09, but will have a copy before then. Yes, Bento’s profit eventually reaches Apple’s bottom line.
Did you press the play button on your tape recorder when you posted that? What is with your whining about glossy screens? I have three Apple monitors and only one of them is glossy. I ordered it glossy for a reason.
You have been watching glossy televisions for decades yet you whine about them obsessively. You are pathetic. Even when commenting on the iPhone you whine about glossy screens:
http://macdailynews.com/index.php/weblog/comments/16151/
Stop your crying and move on.
I’ve got to ask.
If you’re a man that just uses old Macs, why do your panties get in such a bunch over Apple’s new software and hardware?
I think you are spreading this FUD under contract to the Microsoft Corp. I call bullshit on all of your posts.