Wall Street failing to recognize Apple’s blow-out quarter?

“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.

33 Comments

  1. 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.

  2. Totally right. Any chance its Microsoft trying to find a way to spend billions to sink Apple.??? ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    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 ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    en

  3. “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.

  4. 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.

  5. @ 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.

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