Apple’s conservative accounting on iPhone sales
Seeking Alpha has a post about Apple’s business, in general, which contains this nugget about their accounting practices when it comes to iPhone sales:
Unlike other cell-phone manufacturers that book 100% of the revenue from each phone sold within the quarter the sale occurs, Apple amortizes the revenue over eight [8] quarters, 2 years! Apple’s thesis is to match iPhone revenue with the standard 2 year service contract. This accounting is very conservative, as mentioned, but think about it: iPhone sales reported within any quarter actually represent only 1/8 (12.5%) of the total sales. This means there exists an increasing chunk of revenues yet to report. If accounted for under GAAP, Apple’s revenues and earnings from the iPhone would be higher, much higher…
Make of it what you will, but we could be seeing some monster earnings numbers from Apple later this year and into next.
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