Let’s think for a few moments on if say Apple didn’t sell another single Iphone or Apple TV say for the next couple of years; Apple would still see well in excess of $292.5 million each quarter for the next year, taking it as Q3, Q4, Q1, Q2, and also an approximate $763 million through the second half of 2009, and this is just from the 5.4 million Apple iPhones Apple has already sold as of the end of its fiscal 2nd quarter. (Big bucks indeed)
Andy M. Zaky of Appleinsider takes a look at the reason. “The reason? Apple’s war-chest holds nearly $1.170 billion in currently deferred revenue and $763 million in non-currently deferred revenue from sales of the iPhone and Apple TV as of the close of its fiscal second quarter. If 5.4 million iPhones can add about a third of a billion dollars in revenue to Apple’s income statement each quarter over the next four quarters and add an additional $763 million over the following year, imagine what sales of 10 million iPhones per quarter would do. That’s what I set out to demonstrate in this article. The table below delineates how much revenue Apple will actually recognize over the next four quarters as a result of the 5.4 million iPhones it has sold as of the end of its fiscal second quarter.”
Zaky goes on to add: “To fully grasp the potential impact of the iPhone on Apple’s future financial results, one must be aware of how Apple recognizes its revenue from iPhone and Apple TV sales. For some reason, analysts seem to overlook explaining this important detail to their readers. Under GAAP accounting, a company normally fully recognizes the revenue associated with the sale of a product, such as an iPod, once the device has reached the end user; or less commonly, when the device has shipped. Yet, due to certain idiosyncrasies with Sarbanes-Oxley (SarbOx), Apple is forced to use what is called the subscription method of accounting for recognizing iPhone revenue. Under this accounting method, Apple literally divides each iPhone sale by 730, and recognizes the portions from that particular iPhone each day for exactly two years or 730 days.”
To read Andy M. Zaky’s full report see here
Source — macdailynews