Written by Joe Wilcox and published January 25, 2010
This article is about how Apple had one of its highest earnings in the first of the fiscal year ever. The CFO Peter Oppenheimer described it one of Apples best quarters. Apple instituted new reporting rules for this quarter's results. The accounting change gave Apple's results huge lift. Before Apple deferred a huge portion of the iPhone under older subscription accounting rules. The Financial Accounting Standards Board revised new rules in September. The new change means that Apple can immediately recognize the revenue instead of deferring it for 24 months.
The new accounting method explains why Apple exceeded expectations by such a large amount. Apple revised two years of results in support of the accounting change. This added at least another $110 million revenue which was previously deferred over the past 24 months. So the quarter got two lifts: Previous unrecognized revenue is calculated at $25 for every iPhone sold over the last two years and revenue recognized in this quarter that was deferred before and now the revenue jumps, but its more because of the accounting.
For fiscal first quarter, Apple reported $15.68 billion revenue and net profits of $3.38 billion, or $3.67 a share, under the new reporting method. A year earlier, Apple reported revenue of $11.88 billion and $2.26 billion net quarterly profit, or $2.50 per share. I believe that this is a huge difference for the Apple company.
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