Will reporters and analysts again fail to recognize Apple’s huge hidden revenue stream?

“On Wednesday, when Apple announces its fiscal 2009 first-quarter earnings, the business press will rush to report the key metrics: number of units sold for Macs, iPods and iPhones, as well as overall company sales, earnings, and gross margins,” Philip Elmer-DeWitt reports for Fortune.

“But according to some long-time Apple watchers, what really matters tomorrow is whether reporters and analysts will fail — once again — to recognize the rapidly growing value of Apple’s hidden revenue stream,” Elmer-DeWitt reports. “That revenue stream — roughly 40% higher than the one everybody is focused on — flows from the sales of iPhones, which grew 583% in fiscal year 2008. Most analysts, however, don’t include it in their reports to clients because it isn’t recorded in Apple’s books.”

“The problem stems from a decision that Bullish Cross‘ Andy Zaky calls ‘one of the worst in Apple’s history.’ Rather than recognize income from sales of the iPhone in the quarter in which it is collected, Apple spreads it out over eight quarters — the life of a typical iPhone contract,” Elmer-DeWitt reports.

“The result of this so-called subscription accounting is that revenue from the iPhone in any one quarter is like an iceberg: we only see the tip of it. The other 7/8ths are sitting in Apple’s coffers, waiting to be parceled out in future earnings reports,” Elmer-DeWitt reports. “The failure of traders to take those 7/8ths into account is one of the reasons — along with concerns about the CEO’s health and the global economic slowdown — that Apple’s (AAPL) share price has fallen in just over a year from $202 to the low $80s.”

Elmer-DeWitt reports, “In October, Apple finally addressed the problem. Making a rare telephone appearance in an Apple’s quarterly earnings call with reporters and analysts, Steve Jobs tried to focus their attention on Apple’s so-called non-GAAP (generally accepted accounting practices) earnings.”

Much more in the full article here.

[Thanks to MacDailyNews Readers “Judge Bork” and “Jersey_Trader” for the heads up.]

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