AAPL: Buy Now?

  • Posted: 18 March 2009 09:59 AM #16

    Mace - 18 March 2009 06:44 AM

    Capablanca, Mercel and DT

    Thank for enlightening on this issue.  The belief about subscription accounting is it would depress early quarters’ eps while inflating later quarters’ eps.  Is this belief still true?

    No question that subscription accounting will produce a EPS juggernaut when there are 24 months of solid iPhone revenue behind it. The F/S disclosures are not too illuminating on all the specific sources that give rise to the deferred tax asset—at least with the limited time I have to analyze it.

    I’ll post a graph later that shows this after I update for Q2 2009 projection.

         
  • Posted: 18 March 2009 10:26 AM #17

    Mace - 18 March 2009 06:44 AM

    Capablanca, Mercel and DT

    Thank for enlightening on this issue.  The belief about subscription accounting is it would depress early quarters’ eps while inflating later quarters’ eps.  Is this belief still true?

    Yes. However, the impact of deferred revenue accounting on each current quarter’s results should diminish over time. Beginning 24 months out from the original iPhone’s release, each quarter’s deferral will amount to the increase in unit sales over the corresponding period two years prior as the trailing deferrals from 24 months prior are exhausted.

         
  • Posted: 18 March 2009 10:37 AM #18

    DawnTreader - 18 March 2009 01:26 PM
    Mace - 18 March 2009 06:44 AM

    Capablanca, Mercel and DT

    Thank for enlightening on this issue.  The belief about subscription accounting is it would depress early quarters’ eps while inflating later quarters’ eps.  Is this belief still true?

    Yes. However, the impact of deferred revenue accounting on each current quarter’s results should diminish over time. Beginning 24 months out from the original iPhone’s release, each quarter’s deferral will amount to the increase in unit sales over the corresponding period two years prior as the trailing deferrals from 24 months prior are exhausted.

    You are correct that the impact will soften over time, ASSUMING of course that unit sales moderate.  However, we are currently at the low-middle part of the EPS revenue rise, heading toward the top from the impact of 24 months of solid iPHone sales

         
  • Posted: 18 March 2009 11:19 AM #19

    Mercel - 18 March 2009 01:37 PM
    DawnTreader - 18 March 2009 01:26 PM
    Mace - 18 March 2009 06:44 AM

    Capablanca, Mercel and DT

    Thank for enlightening on this issue.  The belief about subscription accounting is it would depress early quarters’ eps while inflating later quarters’ eps.  Is this belief still true?

    Yes. However, the impact of deferred revenue accounting on each current quarter’s results should diminish over time. Beginning 24 months out from the original iPhone’s release, each quarter’s deferral will amount to the increase in unit sales over the corresponding period two years prior as the trailing deferrals from 24 months prior are exhausted.

    You are correct that the impact will soften over time, ASSUMING of course that unit sales moderate.  However, we are currently at the low-middle part of the EPS revenue rise, heading toward the top from the impact of 24 months of solid iPHone sales

    We are in the nascent stage of the iPhone’s global demand so there will be a material and significant deferred revenue impact for many quarters to come. I don’t see iPhone sales moderating in comparison to 24 months prior anytime soon.