Originally Posted by KDarling
Apple reports profits the same way: from direct sales and retailer shipments. Their SEC 10K filing states that returns are accounted for separately.
Btw, I've never read of Samsung having to repurchase a lot of items sold to retailers. Even when the first US tablet end user sales didn't go as quickly as expected, US retailer buying rebounded a couple of quarters later as they sold their inventory and figured out a more realistic amount to purchase for the future.
(Retailer overbuying was also a difficulty for Apple's sales a couple of quarters last year.)
1) Here's Apple's revenue recognition policy from its 10-K, verbatim: "Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, peripherals, and service and support contracts. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. The Company recognizes revenue from the sale of hardware products, software bundled with hardware that is essential to the functionality of the hardware, and third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware.
In addition, Apple provides channel inventory data during every quarterly conference call, so that you can fairly precisely estimate actual sales. And it provides number of actual units sold (so that an investor can calculate an average selling price). Does anyone else do that?
2) Here's Samsung's, from its equivalent of the 10-K: "Sales of products and merchandise are recognized upon delivery when the significant risks and rewards of ownership of goods have transferred to the buyer, continuing managerial involvement usually associated with ownership and effective control have ceased, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. The Company records reductions to revenue for special pricing arrangements, price protection and other volume based discounts. If product sales are subject to customer acceptance, revenue is not recognized until customer acceptance occurs.
Do you notice any differences?
3) Even if Samsung were to repurchase a lot of items, just curious, here would you hear about it? What evidence do you have for your claim that "US retailer buying rebounded a couple of quarters later," and that they "figured out a more realistic amount to purchase for the future"?
4) I did not know that "retailer overbuying" was a problem for Apple "a couple of quarters last year." Please tell us more. Where did you see/read/hear about this? How big a problem was it? 0.1% of sales? 1% of sales? 10% of sales? What impact, if any, did it have on Apple's bottom line and/or its profit share?