Blackfriars' notes from today's Apple conference call with Peter Oppenheimer
The quick version: Apple blew past second quarter estimates, reporting earnings of $0.87 per diluted share, $0.89 per basic share. The official press release is here. But Peter Oppenheimer, CFO of Apple, provided some interesting details that aren't in the release.
Macs were 56% of the quarterly revenue. MacBooks and MacBook Pros led the way. Music products and services were 44% of total revenue. 10.55 iPods. iPod shuffle was especially popular. They are carrying 4-6 weeks of inventory.
Apple retail sales were $844 million. They opened 7 more stores during the quarter, making 177 total stores. Average revenue per store was $5 million. They now have 21 stores outside the US. Sydney and Glasgow are coming later. They'll also have a third store in Manhattan in the Meat Packing district. Stores see on average more than 10,000 customers per store per week.
So here was the surprising news: Apple will continually develop new software features for the iPhone and Apple TV series, and Apple will upgrade the features free of charge. As a result, they'll recognize deferred revenue for iPhone sales, accessories, and subscription revenue over 24 months. This accounting policy will have no impact on cash flow, but it will smooth out their lumpy results over two years.
Even more surprisingly, Apple TV features will also be updated over time free of charge, and therefore Apple will amortize that revenue over 24 months as well.
Our analysis: Apple sees the boom in its revenue that we forecast in our report, Analyzing Apple: Beyond the Computer, and doesn't want its earnings to as lumpy as we forecast. So they're going to be smoothing that revenue over a two-year period. What that means though is that Apple will also have the ability to control its earnings more.
I'll note that our forecast for both Mac and iPod shipments were quite close to what Apple actually reported; our difference in earnings predicted was entirely due to Apple controlling its costs better and getting lower component costs.
Macs were 56% of the quarterly revenue. MacBooks and MacBook Pros led the way. Music products and services were 44% of total revenue. 10.55 iPods. iPod shuffle was especially popular. They are carrying 4-6 weeks of inventory.
Apple retail sales were $844 million. They opened 7 more stores during the quarter, making 177 total stores. Average revenue per store was $5 million. They now have 21 stores outside the US. Sydney and Glasgow are coming later. They'll also have a third store in Manhattan in the Meat Packing district. Stores see on average more than 10,000 customers per store per week.
So here was the surprising news: Apple will continually develop new software features for the iPhone and Apple TV series, and Apple will upgrade the features free of charge. As a result, they'll recognize deferred revenue for iPhone sales, accessories, and subscription revenue over 24 months. This accounting policy will have no impact on cash flow, but it will smooth out their lumpy results over two years.
Even more surprisingly, Apple TV features will also be updated over time free of charge, and therefore Apple will amortize that revenue over 24 months as well.
Our analysis: Apple sees the boom in its revenue that we forecast in our report, Analyzing Apple: Beyond the Computer, and doesn't want its earnings to as lumpy as we forecast. So they're going to be smoothing that revenue over a two-year period. What that means though is that Apple will also have the ability to control its earnings more.
I'll note that our forecast for both Mac and iPod shipments were quite close to what Apple actually reported; our difference in earnings predicted was entirely due to Apple controlling its costs better and getting lower component costs.
Technorati Tags: Analysis, Analyzing Apple, Apple, Financial analysis, iPhone
posted by Carl Howe at
5:26 PM
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