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Apple’s extra 1 billion dollars of deferred revenue

Apple’s (AAPL) deferred revenues are “a huge stream of revenues that it doesn’t add into the quarter’s numbers,” Stephen Rosenman explains for Seeking Alpha.

“Deferred revenues represent money actually received but not officially booked, because more services may be required by the company to the customer. APPL has recently decided to make a large amount of its sales–iPhones, Apple TV, AppleCare– go to deferred revenues. So when AAPL sells its iPhones, Apple TVs and AppleCare, it only books a small portion of the revenues in the quarter sold. The company reasons that customers may require other services on these products such as free software upgrades. AAPL sets a two year period over which these products are incrementally added to its balance sheet. Remember the costs of iPhones and Apple TVs have already been largely incurred,” Rosenman writes.

“This quarter, AAPL did 1 billion dollars of deferred revenue, money that will be gradually added in quarter after quarter over a 2 year period… That’s why its operating cash flow is so high at 2.787 billion, almost twice the net income. This hidden revenue stream has largely been paid,” Rosenman writes. “And, as long as iPhones and Apple TVs are being sold, deferred revenue will be a huge factor, one that must not go unnoticed.”

Full article here.

MacDailyNews Note: We have corrected certain Apple product name errors in Rosenman’s original article in order to keep the focus on the salient point: Apple’s deferred revenue stream.

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