“A great many negative articles regarding the future of Apple (AAPL) have been written since their latest quarterly report. To be fair, Apple delivered a rare ‘miss’ of analysts’ expectations in earnings, and their guidance for the upcoming quarter was highly conservative,” Gary Morton writes for Seeking Alpha. “These issues helped create an opening for a flood of negativity on the company. In reality, were it not for an obscure accounting rule, Apple would have beat in earnings as well as revenue.”

“It is important to understand the facts before concluding on the meaning or long-term implications of a financial report. While Generally Accepted Accounting Principles (GAAP) typically facilitate accurate reporting, sometimes they can lead to timing issues in recognizing expenses or income that obscure the underlying operating results of a quarter,” Morton writes. “This occurred in Apple’s fiscal Q412 earnings release. A widely overlooked anomaly in Apple’s report reveals greater underlying strength for their quarter. The CFO and the Treasurer explained the reasons for the anomaly during their quarterly conference call, but most analysts and followers of the company do not appear to have given credibility or notice to the explanation. If we account for the anomaly, the quarterly report looks substantively better and further reveals the excellent health of the company.”

Morton writes, “Apple’s fiscal Q412 report contained substantive timing anomalies affecting the OI&E line. If we normalize and adjust for the anomaly over the three quarters that Apple has clearly stated will be impacted, it paints a different picture of the fiscal Q412 earnings. It means that Apple was forced to understate earnings for the most recent quarter by approximately $242 million, which equates to $0.25/share. That implies an actual $0.17 per share BEAT of expectations and YOY growth of 27% in earnings (equivalent to the revenue growth).”

Read more in the full article here.

[Thanks to MacDailyNews Reader “John M.” for the heads up.]

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