FASB approves accounting changes that will allow Apple to realize revenue sooner

Seth Weintraub
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September 23, 2009
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Call your broker!  The FASB has changed its accounting rules this morning, allowing Apple to realize the revenue from its iPhones and AppleTV devices at purchase rather than slowly over two years.  It also allows Apple to stop charging nominal fees for iPod Touch software updates - when it doesn't necessarily want to.  AAPL is up almost 4 points on the day.

Apple Inc. 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 [and AppleTV]. 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. An Apple spokesman couldn't immediately be reached for comment.

 

Comments (5)

9to5Mac Noob (not verified) | September 23, 2009 - 12:58pm

oh nop..185

9to5Mac Noob (not verified) | September 23, 2009 - 1:45pm

what... what??

9to5Mac Noob (not verified) | September 23, 2009 - 1:46pm

This is purely an accounting change and has absolutely no effect on cash flow or company valuation.

battiato1981 (not verified) | September 23, 2009 - 2:49pm

...Price/earning ratios which is one of the key things that many investors look for to determine fair price. Only one of many factors of course, but there it is. Even though GAAP versus Non-GAAP figures have been broken out for a while, this will drive the point home and erase the discrepancy.

So I disagree, it WILL change the valuation in that it will change perception and so follows investor dollars, driving up the share price (it's already happened in the last 10 days, but will continue).

At the same time, this change rubs both ways and any drop in sales/profits of iPhones will be reflected in the bottom line as soon as such a quarter ends. That was the up side of the subscription pricing, smoothing out bumps, now gone.

9to5Mac Noob (not verified) | September 24, 2009 - 4:09pm

Hey batt, you were already proven wrong today. Geniuses like you are the reason for the Intertubes bubble back in 99. PE does not matter. Cash flow is king. However, continue your logic, that is how I make money.