“Accounting rulemakers approved a change Wednesday that will give a boost to technology companies and other firms by allowing them to recognize some revenues faster,” Michael Rapoport reports for Dow Jones Newswires. “The change okayed by the Financial Accounting Standards Board helps companies that sell goods and services in bundles – like smart phones and other high-tech devices combining hardware and software, or home appliances that come with installation and service contracts.”
“Under current accounting rules, companies must often defer large portions of their revenue from such sales – recognizing them gradually over time, instead of immediately when the sale is made. The rule change would give companies more flexibility in crediting more of that revenue to their results upfront,” Rapoport reports.
“Apple Inc. (AAPL) is expected to be one of the major beneficiaries of the change, since it would dramatically change how the company reports revenues from its iPhone. Currently, Apple recognizes iPhone revenue over a two-year period, and said recently that overall revenues and earnings in its latest quarter would have been much higher if it didn’t have to defer revenues for the iPhone and its Apple TV product,” Rapoport reports.
Full article here.
non gaap rules
But will it make things snappier?
earnings will be snappier!!
Some will snap up some profits.
That snappier!
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Does this also mean paying for OS upgrades like iPod touch users have to??
Well expect Apple to hit $200.00 or more by the end of the year. The Q4 2009 Numbers Released in Late October, are not likely to reflect the GAAP rule changes I do expect Apple will adopt the changes in GAAP starting with Q1 2010 so the earns report to reflect the big change will be released in late January. The Price of Apple’s stock will climb in anticipation of how the GAAP rules changes will positively effect Apple Q1 earnings.
As Q1 is also historically Apple’s best quarter the price of AAPL might even spike as has as $250.00 prior to the Q1 Earns call around Jan. 22, 2010.
Breeze:
The point is that the non-GAAP rules just became the GAAP rules, and now analysts and brokers can use current revenue figures without incurring any liability. The game has changed significantly for Apple.
DAMN YOU OBAMA!!
Of course, the change is as meaningless as a stock split – it has no effect on the valuation or earnings. While this may well ignite an Apple rally, the sad, sad, sad part is that there are must be many “ANALysts” who apparently don’t look at any metric beyond EPS when considering stocks!
I hope the stock breaks $200 or $230 so I can sell 200 of my shares and buy a pool. Then I can sit by the pool with my iPhone and MacBook, signed into my Time Capsule’s wireless network, and check the price of my remaining AAPL stock…
“Under current accounting rules, companies must often defer large portions of their revenue from such sales – recognizing them gradually over time, instead of immediately when the sale is made
So now, really, those companies legally lie?
Zeke:
non gaap rules ok!
JES42,
“Does this also mean paying for OS upgrades like iPod touch users have to??”
I would say just the opposite. I suspect this ruling means there’ll be a perception bump in Apple’s stock price, and that major iPod touch upgrades will be free.
DAMN YOU BUSH, RUSH, HANNITY, & BECK!!!
Damn you all to hell for disagreeing with us. You must be silenced for my fragile little ears cannot handle an opinion that differs from mine.
Don’t get me wrong, I fully support the 1st amendment but we must draw the line somewhere.
Soda tax anyone?
Contrary to what some of you might hope or think, today’s ruling by the FASB has nothing to do with the Sarbanes-Oxley regulations that obligate iPod touch owners to pay for OS upgrades. They are two completely different things.
Revenues should be reported when the money is recieved.
@ Snow Leopard, you crack me up!
250? More like 300 here we come!!!
MDN, where jokes never, ever die. They just get really, really, r-e-a-l-l-y old.