Stephen Withers
Thursday, 22 January 2009 08:52
Opinion and Analysis
Page 2 of 3
Apple's revenue was $US10.17 billion, with net profit of $US1.61 billion.
"Our outstanding results generated over $US3.6 billion in cash during the quarter," said Peter Oppenheimer, Apple's CFO.
The company says it uses subscription accounting for iPhone and Apple TV sales as it may provide additional software (eg to implement new features) free of charge to the buyer.
This means the revenue from these devices isn't recognised at the time of sale, instead it is booked in equal shares over eight quarters - the notional economic life of an iPhone or Apple TV being two years.
I don't want to get too deep into the argument about whether the Generally Accepted Accounting Principles (GAAP) really do or don't mandate this treatment. It's easy to see why they might - recognising all the revenue but not all of the costs incurred would give an optimistically false view of a company's position.
But Apple recognises all the Mac and iPod revenue at the time of sale, claiming it "does not provide future unspecified features or additional software products to those customers free of charge."
Essentially, this was the justification for charging for the 802.11n enabler for Macs that shipped with 11n hardware but not the software support needed to make it work. At the time, accounting experts asserted that the rules did not require Apple to charge for such upgrades.
But is Apple being completely consistent? See
page 3.
