I have a feeling they will report the non-GAAP numbers as their official numbers, but still report the GAAP numbers at least for a small period of time. Similar to what they are doing now, just the opposite. It will keep the numbers comparable for the time being.
Right, sort of what I was saying. I just don't see the advantage, at least from an investor's point of view. I think this must save Apple some accounting effort internally, or they'd care not at all.
I learn something new everyday. I was always under the impression you had to buy in lots of 100. I guess this is why I don't mess around in the stock market
Odd lots are a thing of the past, at least AFAIK. Most brokers are flat-rate now, so the fees on a small trade are going to be pretty large proportionally.
Then will the updates still be free for ATV? Or has that changed? If so, why not free for the iPod Touch?
Yes ATV updates will still be free.
iPod touch users have never had free major updates because Apple does not use the GAAP account rules for them, they realise ALL the revenue at the time of the iPod touch sale.
Macrumours has a much more accurate report here :-
Dow Jones Newswires reports that the Financial Accounting Standards Board (FASB) has given final approval to a change in accounting regulations that will allow Apple to recognize more of its iPhone and Apple TV revenue at the time of sale.
The change okayed by the Financial Accounting Standards Board helps companies that sell goods and services in bundles - like smart phones and other high-tech devices combining hardware and software, or home appliances that come with installation and service contracts.
Under current accounting rules, companies must often defer large portions of their revenue from such sales - recognizing them gradually over time, instead of immediately when the sale is made. The rule change would give companies more flexibility in crediting more of that revenue to their results upfront.
Apple has employed subscription-based accounting for its iPhone and Apple TV segments, which allows the company to provide free software updates over the two-year period considered to be the lifespan of the devices for such purposes. Apple does not use subscription-based accounting for its iPod line, a move which has required the company to charge users nominal fees for operating system updates on the iPod touch.
Apple Inc. (AAPL) 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. 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.
While the change does not affect Apple's cash flow, it will allow the company to more accurately reflect its revenue in its quarterly financial statements. Preliminary approval
Out of curiosity, can someone tell me why doing the above violates Sarbanes-Oxley?
(Did you notice my subtle spelling correction?)
Because to protect shareholders Apple cannot add features to a device later in its life for free as this would restrict share holder benefit.
Sell device for $400 realise the profit and shareholders get their benefit.
If later you improve the device for free via software updates (not fixes but new features) then shareholders can claim that the device should have been priced higher or that the extra features should be paid for. Hence the charge for enabling WiFi 'n' on the iMacs, same reason.
iPod touch users have never had free major updates because Apple does not use the GAAP account rules for them, they realise ALL the revenue at the time of the iPod touch sale.
I will read it but you're contradicting yourself. If Apple TV's revenue (non-subscription accounting) is realised all up front now that would put it in exactly the same category as a Touch hence enabling it to charge for updates. Same for the iPhone as well.
I will read it but you're contradicting yourself. If Apple TV's revenue (non-subscription accounting) is realised all up front now that would put it in exactly the same category as a Touch hence enabling it to charge for updates. Same for the iPhone as well.
Please read again more carefully.
The Apple TV and iPhone currently use GAPP (Subscription) accounting.
That means Apple takes the revenue / profit over a 24 month period.
In fact they also spread their costs (manufacturing, marketing, etc) over the same 24 months.
I am not contradicting myself you just can't read.
Apple TV and iPhone will still continue to get free updates when Apple changes its accounting methods to non GAAP accounting, just as they do now. The law change enables this,
This ha NOTHING to do with Sarbox which if you actually bothered to read it, does not address ANY specific accounting policies. Those are set by the FASB.
Apple FASB rules and accounting principles have long required that revenue be booked when the product is delivered not when ordered. For a subscription, or a software product where feature updates are expected or required at the time of purchase SOME revenue has to be deferred to match up with the actual delivery of those features. To simplify things, companies were allowed to do what Apple did and spread out the revenue evenly over an expected time period since they can not predict actual feature releases.
The crap that the HAVE to charge for touch updates is 100% BS. Lots of companies give out free software updates. For example iTunes. Any pay for iTunes 9? Did Apple have to defer any revenue because they give iTunes away for free? No, duh!
As for influence on the stock price, there should be none. Investors have known about this issue since the iPhone hit the market and it is easy to undo the calculation since the deferred revenue shows up on the balance sheet on day one and simply transfers to the income statement over time. If you do not understand this you should not be buying stocks without professional help.
The Apple TV and iPhone currently use GAPP (Subscription) accounting.
That means Apple takes the revenue / profit over a 24 month period.
In fact they also spread their costs (manufacturing, marketing, etc) over the same 24 months.
I am not contradicting myself you just can't read.
Apple TV and iPhone will still continue to get free updates when Apple changes its accounting methods to non GAAP accounting, just as they do now. The law change enables this,
Again- you're not making sense. If they switch to the exact same non-subscription accounting as the Touch then the rules of the Touch will also apply to them. Sarbanes-Oxley requires Apple to charge Touch users for this very reason!
Think of any new iPhone OS as if you were buying a new OS for your MAc.
Plain and simple.
Kapeesh?
It's not that I can't read, it's that you don't understand.
All I have to say is these new OS upgrades better be significant for Apple to charge for them.
This ha NOTHING to do with Sarbox which if you actually bothered to read it, does not address ANY specific accounting policies. Those are set by the FASB.
Apple FASB rules and accounting principles have long required that revenue be booked when the product is delivered not when ordered. For a subscription, or a software product where feature updates are expected or required at the time of purchase SOME revenue has to be deferred to match up with the actual delivery of those features. To simplify things, companies were allowed to do what Apple did and spread out the revenue evenly over an expected time period since they can not predict actual feature releases.
The crap that the HAVE to charge for touch updates is 100% BS. Lots of companies give out free software updates. For example iTunes. Any pay for iTunes 9? Did Apple have to defer any revenue because they give iTunes away for free? No, duh!
As for influence on the stock price, there should be none. Investors have known about this issue since the iPhone hit the market and it is easy to undo the calculation since the deferred revenue shows up on the balance sheet on day one and simply transfers to the income statement over time. If you do not understand this you should not be buying stocks without professional help.
iTunes has always been free so no loss of revenue for the shareholders - Duh.
ILife is not free when it is updated each year - costs money to update - Duh.
Again- you're not making sense. If they switch to the exact same non-subscription accounting as the Touch then the rules of the Touch will also apply to them. Sarbanes-Oxley requires Apple to charge Touch users for this very reason!
Think of any new iPhone OS as if you were buying a new OS for your MAc.
Plain and simple.
Kapeesh?
It's not that I can't read, it's that you don't understand.
All I have to say is these new OS upgrades better be significant for Apple to charge for them.
I do understand, it is just that you have not realised that Apple can now choose if charge for iPod touch updates in the future, They now DON"'T have to, it is up to them. They won't break any rules if they do now. THAT IS WHY THE LAW CHANGED!!!!
Wow... $260 would be nice... but I won't hold my breath. Seems to make a $200 call a pretty safe investment.
If the stock market were rational, we wouldn't see the wild swings we do. Still don't understand why people think AMZN is worth 3x GOOG on a P/E basis...
Again- you're not making sense. If they switch to the exact same non-subscription accounting as the Touch then the rules of the Touch will also apply to them. Sarbanes-Oxley requires Apple to charge Touch users for this very reason!
Think of any new iPhone OS as if you were buying a new OS for your MAc.
Plain and simple.
Kapeesh?
It's not that I can't read, it's that you don't understand.
All I have to say is these new OS upgrades better be significant for Apple to charge for them.
My guess is that Apple will charge WILL charge for iPhone / iPod touch updates from the next major release, just like your major Mac OS updates. They will want to get on the same method to charge for updates.
The free updates served them well while they were developing the iPhone OS, but now it is getting feature rich and there is less to improve, they will start to charge for updates. I think that was probably always the plan they had. After 2 - 3 years start charging for iPhone OS updates, just like the iPod touch. They know it works as people pay. It may only be $5 a pop but it is going to happen.
I do understand, it is just that you have not realised that Apple can now choose if charge for iPod touch updates in the future, They now DON"'T have to, it is up to them. They won't break any rules if they do now. THAT IS WHY THE LAW CHANGED!!!!
Where did you read that SARBANES- OXLEY (The LAW) HAS BEEN REPEALED? Jeesh!
My guess is that Apple will charge WILL charge for iPhone / iPod touch updates from the next major release, just like your major Mac OS updates. They will want to get on the same method to charge for updates.
The free updates served them well while they were developing the iPhone OS, but now it is getting feature rich and there is less to improve, they will start to charge for updates. I think that was probably always the plan they had. After 2 - 3 years start charging for iPhone OS updates, just like the iPod touch. They know it works as people pay. It may only be $5 a pop but it is going to happen.
You're still not getting it. They will indeed charge. It's required by law. The law has not been repealed.
You're still not getting it. They will indeed charge. It's required by law. The law has not been repealed.
Lets all settle down. Go back to the original article:
Quote:
Apple lobbied heavily for the change to the generally accepted accounting principles (GAAP), citing the rules as the reason it must charge some customers nominal fees for upgrades to products like the iPod touch and Airport Extreme.
No, S/O has not been repealed, but they *have* changed the accounting rules that feed into it. This change will, in effect, seem like an adjustemnt to S/O.
Apple lobbied heavily for the change to the generally accepted accounting principles (GAAP), citing the rules as the reason it must charge some customers nominal fees for upgrades to products like the iPod touch and Airport Extreme
Does that mean that future updates of the iPhone OS could be FREE for iPod Touch users? If yes, this is really a big deal. There are iPod Touches used in much more places than there is App Store, making it impossible for people to legitimately setup an account and pay for apps or even the software update.
Does that mean that future updates of the iPhone OS could be FREE for iPod Touch users? If yes, this is really a big deal. There are iPod Touches used in much more places than there is App Store, making it impossible for people to legitimately setup an account and pay for apps or even the software update.
No. Apple can now recognise all revenue for iPHONE and AppleTV up front now. That's all.
Lets all settle down. Go back to the original article:
No, S/O has not been repealed, but they *have* changed the accounting rules that feed into it. This change will, in effect, seem like an adjustemnt to S/O.
(don't forget to apologize)
The only half of the answer. Are you interpreting this as a stop to charging for Touch and start charging for iPhones and ATVs? I'm not. To me it's only about reporting iPhone and Apple TV numbers all up front- FASB. FASB HAS NOTHING TO DO WITH CHARGING FOR UPDATES- that is LAW. If Apple was illegally charging then expect a lot of lawsuits demanding back for those Touch users.
Does that mean that future updates of the iPhone OS could be FREE for iPod Touch users?
Yes, that is what Apple is saying they want to do....
Quote:
If yes, this is really a big deal.
It could save Touch users $10 here and there. More importantly, in my mind, is it is less likely to piss them off every 6 to 12 months...
Quote:
There are iPod Touches used in much more places than there is App Store, making it impossible for people to legitimately setup an account and pay for apps or even the software update.
Comments
I have a feeling they will report the non-GAAP numbers as their official numbers, but still report the GAAP numbers at least for a small period of time. Similar to what they are doing now, just the opposite. It will keep the numbers comparable for the time being.
Right, sort of what I was saying. I just don't see the advantage, at least from an investor's point of view. I think this must save Apple some accounting effort internally, or they'd care not at all.
I learn something new everyday. I was always under the impression you had to buy in lots of 100. I guess this is why I don't mess around in the stock market
Odd lots are a thing of the past, at least AFAIK. Most brokers are flat-rate now, so the fees on a small trade are going to be pretty large proportionally.
Then will the updates still be free for ATV? Or has that changed? If so, why not free for the iPod Touch?
Yes ATV updates will still be free.
iPod touch users have never had free major updates because Apple does not use the GAAP account rules for them, they realise ALL the revenue at the time of the iPod touch sale.
Macrumours has a much more accurate report here :-
http://www.macrumors.com/2009/09/23/...ue-accounting/
Dow Jones Newswires reports that the Financial Accounting Standards Board (FASB) has given final approval to a change in accounting regulations that will allow Apple to recognize more of its iPhone and Apple TV revenue at the time of sale.
The change okayed by the Financial Accounting Standards Board helps companies that sell goods and services in bundles - like smart phones and other high-tech devices combining hardware and software, or home appliances that come with installation and service contracts.
Under current accounting rules, companies must often defer large portions of their revenue from such sales - recognizing them gradually over time, instead of immediately when the sale is made. The rule change would give companies more flexibility in crediting more of that revenue to their results upfront.
Apple has employed subscription-based accounting for its iPhone and Apple TV segments, which allows the company to provide free software updates over the two-year period considered to be the lifespan of the devices for such purposes. Apple does not use subscription-based accounting for its iPod line, a move which has required the company to charge users nominal fees for operating system updates on the iPod touch.
Apple Inc. (AAPL) 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. 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.
While the change does not affect Apple's cash flow, it will allow the company to more accurately reflect its revenue in its quarterly financial statements. Preliminary approval
Out of curiosity, can someone tell me why doing the above violates Sarbanes-Oxley?
(Did you notice my subtle spelling correction?)
Because to protect shareholders Apple cannot add features to a device later in its life for free as this would restrict share holder benefit.
Sell device for $400 realise the profit and shareholders get their benefit.
If later you improve the device for free via software updates (not fixes but new features) then shareholders can claim that the device should have been priced higher or that the extra features should be paid for. Hence the charge for enabling WiFi 'n' on the iMacs, same reason.
Yes ATV updates will still be free.
iPod touch users have never had free major updates because Apple does not use the GAAP account rules for them, they realise ALL the revenue at the time of the iPod touch sale.
I will read it but you're contradicting yourself. If Apple TV's revenue (non-subscription accounting) is realised all up front now that would put it in exactly the same category as a Touch hence enabling it to charge for updates. Same for the iPhone as well.
http://www.benzinga.com/craig-jones/...l-skyrocket-50
I will read it but you're contradicting yourself. If Apple TV's revenue (non-subscription accounting) is realised all up front now that would put it in exactly the same category as a Touch hence enabling it to charge for updates. Same for the iPhone as well.
Please read again more carefully.
The Apple TV and iPhone currently use GAPP (Subscription) accounting.
That means Apple takes the revenue / profit over a 24 month period.
In fact they also spread their costs (manufacturing, marketing, etc) over the same 24 months.
I am not contradicting myself you just can't read.
Apple TV and iPhone will still continue to get free updates when Apple changes its accounting methods to non GAAP accounting, just as they do now. The law change enables this,
Apple FASB rules and accounting principles have long required that revenue be booked when the product is delivered not when ordered. For a subscription, or a software product where feature updates are expected or required at the time of purchase SOME revenue has to be deferred to match up with the actual delivery of those features. To simplify things, companies were allowed to do what Apple did and spread out the revenue evenly over an expected time period since they can not predict actual feature releases.
The crap that the HAVE to charge for touch updates is 100% BS. Lots of companies give out free software updates. For example iTunes. Any pay for iTunes 9? Did Apple have to defer any revenue because they give iTunes away for free? No, duh!
As for influence on the stock price, there should be none. Investors have known about this issue since the iPhone hit the market and it is easy to undo the calculation since the deferred revenue shows up on the balance sheet on day one and simply transfers to the income statement over time. If you do not understand this you should not be buying stocks without professional help.
Please read again more carefully.
The Apple TV and iPhone currently use GAPP (Subscription) accounting.
That means Apple takes the revenue / profit over a 24 month period.
In fact they also spread their costs (manufacturing, marketing, etc) over the same 24 months.
I am not contradicting myself you just can't read.
Apple TV and iPhone will still continue to get free updates when Apple changes its accounting methods to non GAAP accounting, just as they do now. The law change enables this,
Again- you're not making sense. If they switch to the exact same non-subscription accounting as the Touch then the rules of the Touch will also apply to them. Sarbanes-Oxley requires Apple to charge Touch users for this very reason!
Think of any new iPhone OS as if you were buying a new OS for your MAc.
Plain and simple.
Kapeesh?
It's not that I can't read, it's that you don't understand.
All I have to say is these new OS upgrades better be significant for Apple to charge for them.
This ha NOTHING to do with Sarbox which if you actually bothered to read it, does not address ANY specific accounting policies. Those are set by the FASB.
Apple FASB rules and accounting principles have long required that revenue be booked when the product is delivered not when ordered. For a subscription, or a software product where feature updates are expected or required at the time of purchase SOME revenue has to be deferred to match up with the actual delivery of those features. To simplify things, companies were allowed to do what Apple did and spread out the revenue evenly over an expected time period since they can not predict actual feature releases.
The crap that the HAVE to charge for touch updates is 100% BS. Lots of companies give out free software updates. For example iTunes. Any pay for iTunes 9? Did Apple have to defer any revenue because they give iTunes away for free? No, duh!
As for influence on the stock price, there should be none. Investors have known about this issue since the iPhone hit the market and it is easy to undo the calculation since the deferred revenue shows up on the balance sheet on day one and simply transfers to the income statement over time. If you do not understand this you should not be buying stocks without professional help.
iTunes has always been free so no loss of revenue for the shareholders - Duh.
ILife is not free when it is updated each year - costs money to update - Duh.
Again- you're not making sense. If they switch to the exact same non-subscription accounting as the Touch then the rules of the Touch will also apply to them. Sarbanes-Oxley requires Apple to charge Touch users for this very reason!
Think of any new iPhone OS as if you were buying a new OS for your MAc.
Plain and simple.
Kapeesh?
It's not that I can't read, it's that you don't understand.
All I have to say is these new OS upgrades better be significant for Apple to charge for them.
I do understand, it is just that you have not realised that Apple can now choose if charge for iPod touch updates in the future, They now DON"'T have to, it is up to them. They won't break any rules if they do now. THAT IS WHY THE LAW CHANGED!!!!
If the stock market were rational, we wouldn't see the wild swings we do. Still don't understand why people think AMZN is worth 3x GOOG on a P/E basis...
Again- you're not making sense. If they switch to the exact same non-subscription accounting as the Touch then the rules of the Touch will also apply to them. Sarbanes-Oxley requires Apple to charge Touch users for this very reason!
Think of any new iPhone OS as if you were buying a new OS for your MAc.
Plain and simple.
Kapeesh?
It's not that I can't read, it's that you don't understand.
All I have to say is these new OS upgrades better be significant for Apple to charge for them.
My guess is that Apple will charge WILL charge for iPhone / iPod touch updates from the next major release, just like your major Mac OS updates. They will want to get on the same method to charge for updates.
The free updates served them well while they were developing the iPhone OS, but now it is getting feature rich and there is less to improve, they will start to charge for updates. I think that was probably always the plan they had. After 2 - 3 years start charging for iPhone OS updates, just like the iPod touch. They know it works as people pay. It may only be $5 a pop but it is going to happen.
I do understand, it is just that you have not realised that Apple can now choose if charge for iPod touch updates in the future, They now DON"'T have to, it is up to them. They won't break any rules if they do now. THAT IS WHY THE LAW CHANGED!!!!
Where did you read that SARBANES- OXLEY (The LAW) HAS BEEN REPEALED? Jeesh!
My guess is that Apple will charge WILL charge for iPhone / iPod touch updates from the next major release, just like your major Mac OS updates. They will want to get on the same method to charge for updates.
The free updates served them well while they were developing the iPhone OS, but now it is getting feature rich and there is less to improve, they will start to charge for updates. I think that was probably always the plan they had. After 2 - 3 years start charging for iPhone OS updates, just like the iPod touch. They know it works as people pay. It may only be $5 a pop but it is going to happen.
You're still not getting it. They will indeed charge. It's required by law. The law has not been repealed.
You're still not getting it. They will indeed charge. It's required by law. The law has not been repealed.
Lets all settle down. Go back to the original article:
Apple lobbied heavily for the change to the generally accepted accounting principles (GAAP), citing the rules as the reason it must charge some customers nominal fees for upgrades to products like the iPod touch and Airport Extreme.
No, S/O has not been repealed, but they *have* changed the accounting rules that feed into it. This change will, in effect, seem like an adjustemnt to S/O.
(don't forget to apologize)
Apple lobbied heavily for the change to the generally accepted accounting principles (GAAP), citing the rules as the reason it must charge some customers nominal fees for upgrades to products like the iPod touch and Airport Extreme
Does that mean that future updates of the iPhone OS could be FREE for iPod Touch users? If yes, this is really a big deal. There are iPod Touches used in much more places than there is App Store, making it impossible for people to legitimately setup an account and pay for apps or even the software update.
Does that mean that future updates of the iPhone OS could be FREE for iPod Touch users? If yes, this is really a big deal. There are iPod Touches used in much more places than there is App Store, making it impossible for people to legitimately setup an account and pay for apps or even the software update.
No. Apple can now recognise all revenue for iPHONE and AppleTV up front now. That's all.
Lets all settle down. Go back to the original article:
No, S/O has not been repealed, but they *have* changed the accounting rules that feed into it. This change will, in effect, seem like an adjustemnt to S/O.
(don't forget to apologize)
The only half of the answer. Are you interpreting this as a stop to charging for Touch and start charging for iPhones and ATVs? I'm not. To me it's only about reporting iPhone and Apple TV numbers all up front- FASB. FASB HAS NOTHING TO DO WITH CHARGING FOR UPDATES- that is LAW. If Apple was illegally charging then expect a lot of lawsuits demanding back for those Touch users.
Does that mean that future updates of the iPhone OS could be FREE for iPod Touch users?
Yes, that is what Apple is saying they want to do....
If yes, this is really a big deal.
It could save Touch users $10 here and there. More importantly, in my mind, is it is less likely to piss them off every 6 to 12 months...
There are iPod Touches used in much more places than there is App Store, making it impossible for people to legitimately setup an account and pay for apps or even the software update.
Here you loose me--I dont see the relevance...