Jim Goldman’s article “iPhone 3GS Could Be a Blockbuster” http://www.cnbc.com/id/31395032/site/14081545 quotes Gene Munster as saying that he would have had to reduce his numbers for the quarter had the 3GS not made it out when it did. He also suggests that other analysts may be looking to raise numbers based on the mid-June release.

I have no issue with the statement that the 3GSs “looks like another blockbuster for Apple” and agree the future impact of 3GS and the $99 3G is significant, but given the deferred revenue recognition model, this really doesn’t mean that much to this quarter wrt to earnings.  Or, is this really just a reference to iPhone unit sales and implies that these were coming in weaker than Gene had predicted?

I wouldn’t be too bullish, unless the numbers are going to come from 1st time iPhone buyers. Here in the UK I don’t know a single person who plans to upgrade from 3G, given the utterly prohibitive cost of breaking the O2 contract. I bought my 3G on day 1, I will be in the earliest position to upgrade without penalty in 6 months time. By that date the next iPhone will be 6? months away, and I will be damned if I am then going to lock myself in to another 18 months on the 3G(s), when I may as well wait for the next model in the summer of 2010 and start again without penalty. This all seems so un-Apple, I can only assume that O2 have got Apple by the balls.

cranium - 16 June 2009 10:23 PM

Jim Goldman’s article “iPhone 3GS Could Be a Blockbuster” http://www.cnbc.com/id/31395032/site/14081545 quotes Gene Munster as saying that he would have had to reduce his numbers for the quarter had the 3GS not made it out when it did. He also suggests that other analysts may be looking to raise numbers based on the mid-June release.

I have no issue with the statement that the 3GSs “looks like another blockbuster for Apple” and agree the future impact of 3GS and the $99 3G is significant, but given the deferred revenue recognition model, this really doesn’t mean that much to this quarter wrt to earnings.  Or, is this really just a reference to iPhone unit sales and implies that these were coming in weaker than Gene had predicted?

Apple sold more iPHones in Q3 09 than in Q3 08 without the 3Gs release.  The 3Gs will help as well, but it’s not going to mean so much for GAAP EPS but NonGAAP EPS.  But I’m not sure how much weight NonGAAP EPS carries with WS.  On the other hand, I think Mac sales will have a nice lift from timing the price drop and updates prior to the end of Q3 09.

Yes, cash is such a silly thing for WS to concern itself.

danthemason - 17 June 2009 07:21 AM

Yes, cash is such a silly thing for WS to concern itself.

Yeah, well as you know, we’re going to have hyper-inflation and you shouldn’t hold cash in this environment

An issue with Iphone revenue recognition for this quarter is Apple’s statement that they would delay any new sales from the announcement of the 3.0 software until the release of the 3.0 software.  They then will recognize rateably This means any sales since the March SDK will now be eligible for recognition at approximately 14/700 for the quarter.  The new iphones will have very little effect on the current quarter since they occur so late in the period.  The big effect will be on next quarter when the full 90 days can be captured.  Apple will probably move over a million units into the current quarter but it will make next quarters YOY comparables more difficult.  Apple is probably targeting China for next quarter which will really goose next quarters numbers.

Mercel - 17 June 2009 07:58 AM

danthemason - 17 June 2009 07:21 AM

Yes, cash is such a silly thing for WS to concern itself.

Yeah, well as you know, we’re going to have hyper-inflation and you shouldn’t hold cash in this environment

Nice problem: to have the option of holding or not holding.

danthemason - 17 June 2009 07:21 AM

Yes, cash is such a silly thing for WS to concern itself.

You have a point.

For those of who prefer to follow cash pick-up and non-GAAP earnings versus reported eps, hand set unit sales numbers do make a difference. I read the article and assume Gene’s statements refer to a change in his models had a new phone not been released. Again, it’s an issue of unit sales and non-GAAP results. As pats mentions above, the impact on GAAP results from the new handset and reported eps will be materially diminished due to deferred revenue recognition on iPhones sold.