“Gene Munster at Piper Jaffray certainly seems to think so and if his expectations hold true, it could be time for celebration for Apple shareholders who have always wondered why the way the company accounts for iPhone sorely under-reports the true impact this device has on the company’s balance sheet,” Goldman reports. “No decision has been reached, Munster is quick to say, but trends and momentum might suggest an accounting change could happen sooner rather than later.”
Goldman reports, “Munster reasons, ‘We believe several industry players (we have not confirmed Apple is one of them) and FASB with the Emerging Issue Task Force, are exploring possible amendments to the accounting rules that require subscription accounting. If the rule goes through, we believe Apple will be able to defer the iPhone revenue in a different (and less dramatic) manner. This could meaningfully alter the reported, GAAP-based revenue numbers in future quarters and the change would likely be positive for the stock.'”
Goldman reports, “This is extremely important… Seeing those ‘true’ numbers might have a significant impact on the way investors view the company and call much greater attention to just how profitable Apple really is.”
Full article here.
Now we’ll see numbers that will boggle the mind!
snappier numbers!
Meanwhile the stock is mired in a measly 95% return since the beginning of the year.
/sarcasm
I like it the way it is. This is a significant inefficiency that investors in the know can use to snap up Apple shares at depressed prices. Eventually, the market will catch on. But for now, keep the stock cheap. I’m in it for the (MDN word: long) haul.
Paul
Woo-hoo! The numbers will be added together in a different way and that totally makes the stock way more valuable!
Fsck Wall Street.
——RM
why not just have them report both numbers as they have been doing? every report, you always see “GAAP…” and “Non-GAAP…”
Don’t think it makes a difference either way
The title of this story is certainly misleading. The the general accounting rules change, I would expect Apple to follow suit. It would be more accurate to say that the FASB is considering changing the accounting rules in Apple’s favor.
Although, to be truthful, since Apple reports both GAAP and non-GAAP numbers each quarter, the investors can have whatever view they desire. It is my impression making this change will just further confuse the issues.
This is probably just one step toward ending exclusivity with ATT, since subsidizing will be different with AAPL’s new US partners. My guess.
Can fund/institutional managers with a fiduciary responsibility invest in a company on the basis of non-GAAP accounting information? It might make a significant change in the amount of institutional investing if the numbers could be viewed as more “standard” numbers.
This might also mean that they switch to subscription based charges. So we would be paying for future updates.
@LordRobin
Exactly. Nothing has changed, fundamentally. You just report the same information in a different way. Everyone with any familiarity with Apple knows about the deferred revenue and profits. It really should not make any difference if the rules change. But it probably will…
This shouldn’t change the stock. Changing the accounting doesn’t change the real value of the company. It shouldn’t change the perceived value of the company either, but it might to some who don’t know what they are doing.
Maybe what he means, it could make speech easier to “sell” Apple stock to any lucky loose aka go-go… it would make the company more attractive to the mass therefore if more buyers, price would go up. But fundamentals would remain the same.
@ jjjj – Agreed. This does seem like a precursor to the end of AT&T exclusivity.
I hope the FASB chooses the most conservative choice. If that hurts my Apple stock, so be it.
I’m more concerned about all the companies that misrepresent their financial health. That’s what the FASB should be working on.
I would like a simple one step report and get rid of this gaap non gaap bs. Please show real numbers and stop the bs charging fpr ipod touch updates…give me a freaking break…
So FASB, with its legalized cook book, is saying that because ‘some emergency’ exsists, companies should be allowed to recognize a sale as soon as it happens – even though a continued expense exsists for that same item so long as that item is still functional.
So next year, when income is no longer recognized but the expense is incurred, I suppose FASB will allow expense backdating and revisions to previous earnings without disclosure on the then curtrent report because of some ’emergency’, right?
One couldnt possibly just be making this up as we go…
I don’t believe the accounting change makes AAPL worth more. I do believe changing the accounting method for the iPhone will mean the Apple will now charge for iPhone OS upgrades just like it charges for the iPod Touch upgrades. That will increase revenues and therefore the stock price. Those wishing for the accounting change can look forward to this.