Does Wall Street really understand the massive revenue that iPhone, Apple TV will deliver to Apple?

“If Apple didn’t sell another iPhone or an Apple TV for the next two years, it would still recognize well over $292.5 million in revenue each quarter for the next year (Q3, Q4, Q1 & Q2), and roughly $763 million in revenue throughout the second half of fiscal 2009. That’s just from the 5.4 million iPhones Apple has already sold as of the end its fiscal second quarter,” Andy M. Zaky reports for AppleInsider.

“The reason? Apple’s war-chest holds nearly $1.170 billion in currently deferred revenue and $763 million in non-currently deferred revenue from sales of the iPhone and Apple TV as of the close of its fiscal second quarter,” Zaky reports.

“To fully grasp the potential impact of the iPhone on Apple’s future financial results, one must be aware of how Apple recognizes its revenue from iPhone and Apple TV sales. For some reason, analysts seem to overlook explaining this important detail to their readers. Under GAAP accounting, a company normally fully recognizes the revenue associated with the sale of a product, such as an iPod, once the device has reached the end user; or less commonly, when the device has shipped. Yet, due to certain idiosyncrasies with Sarbanes-Oxley (SarbOx), Apple is forced to use what is called the subscription method of accounting for recognizing iPhone revenue. Under this accounting method, Apple literally divides each iPhone sale by 730, and recognizes the portions from that particular iPhone each day for exactly two years or 730 days,” Zaky reports.

“I am absolutely confounded that Apple is not trading at well over $200 share right now—especially with 22 forward P/E according to my 2009 estimates. But then again: I was shocked to see Apple trade at $50 in July of 2006 and I’ve been long ever since,” Zaky writes.

Much more in the full article here.

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

30 Comments

  1. “Does Wall Street really understand the massive revenue that iPhone, Apple TV will deliver to Apple?”

    That should include the MacBook Air since it is a powerful, light and easy to carry multimedia device.

  2. Stock is going down again!?!?

    Everything is in place, like a chess game, Apple is moving in and we can see the check mate coming.

    …still people are selling AAPL…

    This is just too weird.

  3. @WTF
    Not that weird. Traders are locking in profits they had on earlier purchases of AAPL by selling now. They have an expectation of continued erosion of the overall market which will take AAPL down with it. Traders don’t care to make to make a statement about how much they love Apple by holding AAPL stock; they sell as soon as there is a whiff of a slide in price because it is all about the Benjamins.

  4. Perhaps Wall Streeters are basing their projections on current Apple’s market share, and, based on Apple’s market share, are less than enthusiastic or convinced Apple’s performance will differ significantly from the present doldrums.

    However, you fabois have your own singular market wizard, silverwarloc, who can’t finish sentences, complete a thought, or develop an idea.

  5. @ha, ha, ha
    Seriously though, it would seem that wall street is a bunch of moronic, easily manipulated bunch of children. Market analysis? Please. They trade on their level of fear at the moment.
    AAPL is a buy right now plain and simple. If you have the opportunity to invest do it now before Apple starts to really rake in the billions and the rest of the herd finally realizes they have to buy.

  6. Olernut,

    What a hypocrite you are, fanboi.

    When Apple stocks rose people like yourself heaped praise on Wall Street for how astute and brilliant how market analysts viewed Apple.

    But when the same market analysts turn a stern eye toward Apple, people like yourself suddenly chastise these same analysts as being near-sided dimwits.

  7. KenC:

    MDN rehash? MDN rerun? MDN repeat? MDN retread? You don’t say?

    I’m not surprised. Given the likes of Chatty Cathy (aka Ampar) and his massive mob of mindless misfits muttering moronic Mac mantras like melancholy mumbling meatheads

  8. Frick no, they don’t understand. And all I can do is watch the stupidity of no matter how wonderful Apple performs or produces lately, the stock drops.

    Apple could invent air cars and the stock would still drop, because Steve blew his nose the wrong way at a Keynote.

  9. @afib ha ha ha he he he ho ho ho –

    Another thread full of your posts containing “facts” and ” information”? You’ve added nothing but personal attacks and name calling. You’re following Ampar around MDN like a 5th grade bully trying to provoke him into a fight, and he wisely is ignoring you. My 13 year old nephew is more intelligent and mature than you are.

  10. Denny,

    If you didn’t care, you wouldn’t respond? Right? You don’t have to answer, you know I’m right.

    AAPLguy.

    Spare me your self-righteous hypocrisy. Ampar can dish it out, he just can’t take it. You’re justifying Ampar’s puerile behavior, but heaping condemnation on others proves what a feeble minded fanboi you are.

    Psst, Denny wrote a “bad word”. What are you going to do, AAPLguy?

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