Apple's Bountiful Revenues Are Bigger Than Ever

Apple (AAPL) reported stellar revenues: $7.5 billion, a 43% increase over last year (see conference call transcript). They sold a slew of Macs, software and iPods. The part that gets hazy and literally shoved aside are the iPhone revenues. Apple has elected to defer its iPhone (and iTV) revenues along with its Applecare because it reasons that a variety of software upgrades may be added over the product's lifespan.

Therefore, Apple takes these revenues and expenses over a "straight-line" 24 month period, or 8 quarters. The quarter in which the iPhone is sold accounts for about 1/8th of revenues. Expenses are taken over eight quarters with the exception of R and D, engineering, and sales costs which are taken as incurred. Apple doesn't break down its individual margins for its products so it becomes extremely difficult to decide what percentage of iPhone revenues ultimately becomes profits.

UNAUDITED CONSOLIDATED SCHEDULE OF DEFERRED REVENUE

* Certain prior period amounts have been reclassified to conform to the current period presentation.

(All numbers in millions)

(1) These have very short deferred lives and are online purchases, some sales to educational institution for example.

(2) This is a profound drop in expected deferred income which I suspect has to do with the $100 rebates offered when Apple cut its iPhone price. Adding $816 + $624 from 12/07 gives $1440. Removing 1/8th of this should leave $1260 for non-current 3/08.

Apple declared a whopping $7.5 billion quarter revenue.

The current quarter has real but deferred iPhone and iTV sales of $1.170 billion plus over another $1.2 billion in Apple Care and other soon to be reported revenues. And don't forget the continuing older quarters of $1.4 billion in revenues that will gradually also be added. If Apple did not use this unusual and confusing accounting (Dell (DELL), Nokia (NOK), HP (HPQ) don't), then revenues would have been $9.9 billion for the quarter.

Remember, too, Apple this quarter decided to not recognize any of their iPhones sold from March 6, 2008 on because of an upcoming software upgrade. Only later will Apple recognize them, further underestimating the actual moneys that were received in the quarter (now that's what I call deferring the deferred).

Apple this quarter had a 14% net profit margin. It is currently impossible to tell what the margin is on Apple's iPhones (only the CFO and Steve know for sure and they're not telling). I suspect it's a lot better than low margin businesses like the shuffle or iTunes. Let's give it an 18% net profit margin. Last quarter, 1.170 billion dollars of iPhones were sold plus an unknown sales of most of March. That should give Apple well over $250 million worth of net earnings if they used accounting techniques similar to other companies in their industry. This would give them $1.25 billion of net earnings, or $1.45 a share, dwarfing the $0.87 they made last year. That's what I call an "undeferred" upside surprise.

Disclosure: Author has a long position in AAPL

Comments

[fatcat]

the big worry I have is the price of aapl products..mac seems to be the product that will propel earnings but it is 30-40 % more than comp. machines. In this economy,I don't think that computes.It's probably the reason I don't own one

Most of my work is online,so I can't justify the extra expense..does this make sense or am I missing something?

[Slyboots]

You ARE missing something, fatcat. Take a MacBook Pro, for example, and price a truly comparable machine (processor, hard drive space, memory) -- the difference is really minimal.

[fatcat]

sly,I guess the fact that I'm older(57) and I don't do a lot but trade on line and pay bills online makes me unable to appreciate the differences.

I do enjoy trading the aapl options though..lots of volume and volatility..makes for good profits!!

[Jon T]

Fact is fatcat, Apple simply doesn't make product for the junk end of the market. And it never will. That hasn't, and won't stope Mac sales growing at 10 times the US pc market growth rate.

And actually, prices of Macs are often the same, but sometimes more and sometimes less, than comparably spec'ed Dells, HP's etc.

Back on topic, I begin to wonder that they didn't undertake all this deferred income game as a result of the downturn, and a desire to spread out the good news. For example, just imagine the upside when we come out the other side of this recession.

[fatcat]

Jobs seems to be a slick stock manager Jon,that could be the whole reason..

[Jon T]

And please also let me add fatcat, that I'm sorry you think you can't afford a Mac, well, I bet you can if you price in your time and productivity gains. And, remember that Macs hold their value much better, so buying a second hand one that is two years old will also be a much better bet for you than a PC. Also, consider buying from Apple's refurbished stock, I bought an iMac 3 years ago for UK£700, down from the normal price of UK£1,100 and it is still going perfectly well today. In fact, you couldn't prise it away from my daughter for love nor money! Sell something and afford a Mac, your life will be heaps more enjoyable.

[fatcat]

Jon,I can afford it,I guess I'm just cheap..but I had not considered a refurb..does that have a warranty?

[Jon T]

They have a full 12 months... just as a standard new Mac will.

[taezar]

this website is very useful for people
thanks

[FoobarFoobarFoobar]

So, FatCat, what kind of a car do you drive? A Yugo?

Running a Mac is an enriching aesthetic experience. I am constantly struck by the beauty of the machine, the exquisite design, and the overall build quality.

So it costs $100 more than the cheapest PC. It DOES have the best, and safest, OS, too. And, did you price out a magnetic power plug on your laptop?

Next time your dog runs by and snags the cord and pulls the PC off the table, just remind yourself that you saved $100, as you drive your Yugo to the store to replace the LCD.

[tom1234]

so i again ask ----aapl was $ 200.00 last oct/nov and since then more everything is and will be coming out including earning more money---- and debt --did i say debt FREE--why is this stock DOWN $30.00 ---and should not $200.00 be a number we must pass to get to$$$$$---the WIZZARD is making the street look retarded

[PK deC'ville]

Stephen,

Love your blogging and especially this... "...revenues would have been $9.9 billion for the quarter."

But this deferred revenue stuff hurts my head. Even though I read it several times over (all your DR articles), I still don't see it clearly. My current understanding is that as Apple recognizes the revenue quarterly, it gets added to the total revenue number and then, simply, the rest of the accounting follows to determine profit and cash flow?

How's cash flow affected by defrred revenue and how does it relate to profit?

Can you revisit how current deferred revenue relates to non-current revenue?

Thanks

[PK deC'ville]

Stephen,

From your Mar 8 blog: "The revenues, expenses, and profits are realized straight line over two years except for expenses having to do with engineering, sales, and marketing which are taken out as they occur."

Given the above, wouldn't the iPhone's net profit margin be higher than 18% for the recognized deferred revenue?

[fatcat]

foobar, you're close,I drive a focus...just got done loading service pak 1 for vista..took 1 hour..still can't see any change..maybe I do need a mac! Can't get used to firefox but that helps..

pk,I agree,deferred rev always sounds suspect to me,especially in this climate..

also,what margin are the i phones making with the new gen about to hit. Also ,how about the effect of unlocking??

[Zach Bass]

I think it's entirely possible to provide an intelligent guesstimate on the margin on iPhones. I remember there was an analysis of the cost of parts contained within the 8 GB version, and it was determined to be well under $200.

This doesn't take into manufacturing and other associated costs with bringing the iPhone to store shelves, but if you were to assume that these represented another $25 per phone, then your talking a nearly 50% margin. You could be very conservative and add another 50 bucks, even then you're still talking at least a 33% mark up.

Of course, none of this takes into account the recurring revenue from carriers and the software people will be buying when the iPhone App Store opens. I'll venture to guess that on average, Apple will realize a 100% margin in the long run.

[pats]

Stephen
The non current line on the deferred revenue is over a year out and would be minimally affected by the rebate, since Apple would have already taken the rebate charge when it was redeemed. The revenue is less because they didn't record the transaction after Mar 6 and until 2.0 software is released
(2) This is a profound drop in expected deferred income which I suspect has to do with the $100 rebates offered when Apple cut its iPhone price. Adding $816 + $624 from 12/07 gives $1440. Removing 1/8th of this should leave $1260 for non-current 3/08.

The way you list the calculation is not correct. The non-current deferred would include all the revenue which will not be recognized this year. The new non-current would then add in the amount which is non-current from the current qtrs sales. For 1.7 Mil @ 400 you get 628 M total revenue. 1/8 current qtr 78.5 for Mar 08 1/2 current deferred 314M and 3/8 non- current 235M.

[Cyapp]

I own a MAC and a PC Desktop and Laptop. I agree with Fatcat, it is highly overkill to buy a mac just for the experience of it. The mac and it's browsers cannot handle the web as well as a PC with a combination of IE/Monster. The web is optimized for the PC. In addition, Apple makes a great product but alot of the mystique of the product is clouded by the excellent marketing machine that is behind the MAC. OS X is a pretty solid operating system but it does not offer the wide variety of software choices of Windows nor does it offer the flexibility of hardware. The MAC is still a niche machine. It is over priced considering the only difference between it and a PC is the BIOS chip. I appreciate the MAC but will always maintain a PC. I will not be brainwashed by the apple marketing machine.

[Cyapp]

Sorry I mean IE/Firefox in the browser quote for the PC

[d1werner]

I was not aware of the derferred accounting but it is clear that APPL will go much higher and buying it will not hurt your bottom line. Like fatcat I dipped into options in a big way last year and a bit this year not as much. Of all the people out there I should have an Apple PC but don't, it has taken much to long to convert me but going to correct that in a few days both with desk top and laptop. Sometimes it take longer to teach an old dog new tricks and so it goes.

[User 119816]

Cyapp: No... you are wrong.

Mac in fact offers great flexibility in hardware (PowerMac). The MB/MBP/iM have included many of the items the windoze user will need to add to become functional. Many other H/W capabilities are added with FW/USB.

Mac software choices are many (but you are right, not as many numerically - the VAST majority of Windoze software being poorly written, poorly implemented, and just plain garbage). You convienently forget that the Mac will ALSO run all of that windoze garbage (try running Mac software on your PeeCee!). Most software for the Mac (NOT "MAC") is elegant and far more intuitive.

Windoze does not offer the compelling "whole" of integrated cal/address/email (which I use DAILY in my work), along with search, backup, one-touch preview, and on, and on, and on...

Finally, the cost of comparable machines are equal - please don't continue that garbage that Macs are more expensive... compare, well, apples to apples. Much literature has been written about the cost of ownership as well as head to head costs for machines - Mac ALWAYS wins (these articles written by PeeCee oriented mags primarily).

I just have to doubt you even own a Mac (much less use one) when you state the only difference is a BIOS chip. You, my friend, do NOT know about the Mac "way". The differences are VERY profound.

I, too, own both a Mac (several), and a Pee Cee (forced to by my Employer). The PC is used minimally as I just can't STAND using it - the lack of usability, the instability, the loss of functionality is PROFOUND when I have to use the PC. I do use it because IT at my employer forces one to allow for certain software (security) to be installed on any computer accessing certain areas in the network, and I don't want that software installed on my Mac - even on the Parallels side...

[PK deC'ville]

Pats,

Thanks for this... "The non current line on the deferred revenue is over a year out..."

I made the mistake of taking it as over this qtr out. Very helpful correction.

Thanks.

[Aleem Bawany]

This error has come up before as well in various articles and I don't think your accounting is quite right.

The revenues would certainly not be 9.9bn as the deferred revenue is cumulative and had revenues not been deferred to begin with, the deferred revenue figure would never have reached 2.4bn for the quarter. So adding the sum of all previous quarters' deferred revenue to arrive at the 9.9bn does not indicate much if anything.

[TanToday]

--->"..the WIZZARD is making the street look retarded"

The "street" is RETARDED, got it?

Look, Apple is making so much money now, they are TRYING TO HIDE SOME OF IT, so they can level out earnings, and plot out a chart that has an exponential UPWARDS curve.

THAT is apparent to any true student with a ruler and graph paper.

But the ANAL-ists who cover the stock are OBSESSED with the factiod that the number of $50 iPods isn't increasing much anymore, BLINDED to the glaringly obvious fact that all the EXPENSIVE STUFF WITH HUGE MARGINS is flying off the shelves and out of the online outlets.

I have said this repeatedly, IF THEY WOULD ONLY pay attention to the RETAIL STORES grossing now $4,000 per SF, where the AVERAGE for a GREAT RETAILER is around $500 per SF, even a retardo analyst IF he ever left his cubicle would SEE that there are HORDES of loyal fans, and 50% of EVERY STORE COMPUTER SOLD NOW, is going to a WinDoze PC refugee.

With ONLY 6% of the computer markets now, there remains a HUGE upside, that is 15X larger than the existing markets.

I like those odds, and that is why I'm IN for 2,000 shares.

[marcelbobbe - NL]

I just want to tell American investors that the 8 GB Iphone in Germany is available for 100 euro's !!!!
in the USA the cost is UD 400
in GB sold out and France a bit more expensive than Germany.

[Cyapp]

To : User 119816

See how flexible the "MAC" is when wanting to change video cards, it has only a few options available to it as opposed to the PC. This applies to just about every type of peripheral out there. I own a power mac and I cannot use any video card on the market, nor can i use any sound card, scanner, printer and the list goes on and on. The PC has alot more hardware options in each category available to it. For what is offered in the macintosh on a hardware basis, it is highly overpriced. Now the value you may see in OS x is a different story.

Below is a quick and dirty reference to the limitations of video cards but it should make my point :


Video card options for Mac Pro
May 24, 2007

As I’ve blogged about earlier, I am the proud owner of a Mac Pro. I love it. One thing I don’t love about it though, is the video card. My box came with the default nVidia 7300 GT and it’s a dog. I can draw polygons by hand faster than this thing.

So I went to the Apple store and checked out what options I had for upgrading. Turns out there are three options, nVidia 7300 GT (the one I have), ATI X1900 XT and an nVidia Quadra FX 4500. This is a joke. The Quadra is of no use to me and costs a rediculous amount of money, so I’m left with the ATI X1900 XT. Thing is, this card is so old I wasn’t even able to find it in Swedens two largest online PC stores anymore. The closest thing is the successor, the X1950 XT. This card costs about $285 if you buy it for a PC. Guess what Apple charges for the X1900 XT here in Sweden? $550!

Dear Apple. Please get a grip and start to offer some modern video card options for the Mac Pro. How about an nVidia 8600 GTS? It’s dirt cheap and still packs a punch. Just slap on your custom BIOS or whatever and get it out there!

I have experienced this same situation with upgrading the Radeon Card in my Mac Pro, it costs 250.00 from ATI but the PC version is 99.00. The only difference is the programming of the EEPROM. So sir check your references you are wrong the mac is severely limited when looking for hardware options.

[PK deC'ville]

TanToday,

"...STORES grossing now $4,000 per SF."

The FY 2007 figure was actually $4600/sf and with the retail store segment contributing about 50% more YOY this qtr, I'd estimate they'll be at or above $6000/sf in 2008. Wow!

regards

[TanToday]

PK de C'ville

Retail should and most like will drop some.

The numbers we have seen are simply too GREAT to be sustainable, especially as you move off the AAA++PRIMO locations to secondary ones. That is NOT bad { but the anal-ists WILL immediately pounce on any lessening, as they do with any nit they can pick } Being in commercial real estate for over 30 years, the secondary locations will track less, and sell less, BUT cost less to run also. THAT IS NOT BAD, since even at 2000/ft they are STILL #1 in the entire world at gross per foot.

Just like when the iPod went from $200bucks a pop to $400 and the UNIT NUMBERS slowed down, the morons in cubicles counted the little boxes, and IGNORED the 8% *INCREASE* in dollar volume, and being so myopic, they didn't "get" that EVERY iPHONE is a iPOD too if you want to use it as one.

I want a job like they have, you sit in a nice office, read what the OTHER cubicle dwellers say, toss some darts at a wall, flip a few coins, inspect a weejie board, then WRITE YOUR puff piece, which is then INSTANTLY seized on by equally "talented" fund managers, and YOU knowing virtually nothing, can watch the *POWER OF YOUR PEN* move a stock up or down 5% just because YOU SAID SOMETHING.

...ah, the power must be intoxicating...

[AAPLGOOG]

TanToday,

The problem with readers like you is that you are dumb and arrogant. It's one thing to be dumb but to pass it off like you're smarter than all of wallstreet says a lot about your intellect.

The rest of us "idiots" realize that revenue/sq ft will be even higher for a rolex or ferrari showroom but that is not saying much. You should stick to cleaning toilets if you think AAPL is trying to hide revenues and the street would overlook it while you are the only smart one to catch on to it (and that too, with nothing to show for). You probably never read a balance sheet in your life.

[KenC]

While I appreciate Steve's effort to highlight the unappreciated impact of Deferred Revenues on Apple's income statement, I believe the $9.9B Steve calculated is wrong, as others have noted. My own rough calculations is that Apple might have sold $8+B this past quarter if it had not gone to Deferred Revs.

The difference is Steve's interpretation of the term, "Current". He believes it means Current Quarter. I disagree and believe it to mean, within the next 12 months, the same as how it is used in relation to Assets and Liabilities. Current Assets, within the next 12 months, and Non-current Assets, beyond the next 12 months.

For my own take, take a look at the Opinion piece I wrote a few days ago on MacDailyNews:

macdailynews.com/index.../

[Partners inGrime]

My iMac makes me smile when I use it. It even makes me smile when it's off. :)

[yet anothersteve]

Just to reiterate "non-current"... is accountingspeak for "more than one year out". (The 816 + 624 calculation makes no sense v. non-current in the next quarter.) Means that in any part of financial statements: assets, liabilities, etc. When you defer revenues and expenses over 24 months, obviously you'll end up with both a current and non-current balance.

As for confusion--who can blame Apple for being conservative in its accounting in today's Sarbox environment (and does any company get sued more these days?) They made a customer decision first (upgrades will be free), and we'll just have to live with the math.

[T Muller]

This Math is off- Not 9.9 Billion for the quarter if didn't defer revenue. More like one-tenth of that.

Since iPhone is only 3 quarters old- any ST DR that is recognized is replaced with LT DR as it shifts through the balance sheet. So, ST DR (Q2-Q1)= 1170-816=$354 That's the addition to ST DR from Q2 iPhone sales. and multiply by two since current DR is only 4 qtrs, and the actual sale is spread over 8. Suggest that iPhone sales were 708 million in Q2. 1.7 million units, $416.5 a phone.

Revenue recognized was 378 in Q2 and 241 in Q1. increase of $137, which was the actually rev from Q2 phones, 241 of the 378 was deferred rev being recognized from Q1 & Q4. If, Q2 iphones weren't deferred then it would be 137*8 = 1096.

1096 million projection from recognized sales (Q2) is obviously higher than the 708 number calculated by change in current DR. The difference of $388 million, is $228 per phone more than the $416 ASP calculated from DR. (1.7m sold)

Recognized revenues include ATT payments, where deferred revenue is cash Apple has already received from the device sale, thus the $226/phone difference is the effect of the ATT subsidy, - divide by 24 and it's $ 9.50 a month / contract.

Those figures are rough, general estimates. It's impossible to know for sure because sales are recorded by month and reported by quarter, plus there are other items in the DR, and Apple had also quit recognizing iphone revenue for sales after Mar 6 until new OS release.

However, sales would be about 1B on 1.7 units if not deferred, not 9.9 Billion.

[PK deC'ville]

T Muller,

I believe you wanted to say the revenue would be reported as $7.5B plus $1B = $8.5B for the qtr, right?

[PK deC'ville]

T Muller,

"Recognized revenues include ATT payments, where deferred revenue is cash Apple has already received from the device sale, thus the $226/phone difference is the effect of the ATT subsidy, - divide by 24 and it's $ 9.50 a month / contract."

You've assumed that all 1.7M phones are getting ATT payments. Assuming only 1.2M are getting them w/ .5M being jail broken we get a difference of $323 per phone divided by 24 = $13.47 a month/contract.

[T Muller]

PK,
~8.5B for the qtr.

Yes that 9.50/month contract number is assuming all 1.7 phones get payments. It's an average, but in no way representative of the actual contract payment amount.

Not all phones are getting payments. And, fir the ones that are, don't know how may phones got how many months in the qtr. Could be that 20% of the 1.7 million, got 2m or 50%, who knows, then with the announcement of holding of march - june recognition makes it real nebulous. When I did some math on the september qtr numbers when iPhone was just ATT, I was coming up with close to a $20/month. I am not confident in that number, it's tough to back into without really having the detailed accounting.

[auren]

Cyap, you are so last century! You remind me of the days when everyone on the block used to change their own oil on the family car.
Anyone who uses a computer with an operating system (Vista) that the CEO (Ballmer) admits in public that it is a "work in progress" after five YEARS of development is at least one brick short of a load.

[pats]

T Muller. I agree with you and good analysis. Just a couple small points. A portion of the qtrly sales revenue will be reported on the 1.703M sold in the quarter. I base this on the fact the 5M of Iphone revenue was recognized Q3 07 with only 3 days of sales. It looks like Apple does daily accounting of numbers for revenue calculation although we are analyzing using quarterly accounting. Also Apple has started adding in the ATV revenue which will further muddy the water in determining a actual GM and carrier payment

[TanToday]

-->>"You should stick to cleaning toilets if you think AAPL is trying to hide revenues and the street would overlook it while you are the only smart one to catch on to it (and that too, with nothing to show for). You probably never read a balance sheet in your life."

As an experienced FORENSIC commercial real estate manager, I had a good hoot at that one.

The very BEST way to 'hide something from Wall Street' is to put it right out there on your balance sheet, "hiding it in plain sight" as it were.

Why else would APPLE be using such a conservative manner on accounting for revenues, normally, a company wants to UP the earnings, here you have them doing a LOT to reduce them, defer them, spread them out, even postpone them.

I believe the conclusion that I'm making is they know they are HOT and don't want to get the .com bubble thing going with the inevitable fallout when the momentum surge ameliorates.

[T Muller]

Pats- thnx

3Q07- iPhone revenue was accessories, no handsets or carrier payments. Apple books by month, but they decide which month to start recognizing. I was trying to say - know unit sales for qtr, but don't know which month, or how many. For instance, 1.7m units could have been sold all in the first month, (hypothetical example) and get 3 months of rev recognition with the payments. Or, they could all be sold they last day of the quarter, and Apple decides to defer it all, and thy recognize no new revenues (other than the deferred rolling off last qtr).

Realistically, phones are sold every day of the month, and some days more than others, thus tough to know the monthly volume. I think even if we did, Apple can still choose to defer. All phones sold after Mar 6 are deferred and won't start coming off until the update. It's muddied alright. We really have no clue to what the Apple TV impact is, and how much sales of it are in there too.

[NetworkEffect]

Apple's iPhone is a lot more than just a phone. They're building a network, which as we've seen from Microsoft, eBay, Ma Bell, NYSE, etc is the most powerful business model in the world. Phone service will be free one day. It's the ecosystem that Apple builds around the iPhone that will determine whether this thing will be revolutionary (commerce, video, software, chat, etc). But even if they fail to get traction with the ecosystem, they will always be able to sell the hardware and make a pretty penny. But my guess is that the iPhone is at the beginning of a revolution. We aint seen nothin yet.

[dithers]

Well done to TanToday for staying friendly when attacked - shows class.

The upside is huge - thats for sure. The details? Who cares! Buy the stock, its going to $250 this year!

NO-ONE can make an iPhone killer. It would take years of research and
a great OS to do that. Who has that skill? ONLY APPLE.

[beech_35]

There are a huge number of people who have Macs at home and love them, but like User above are chained by their employer to the tyranny of Windows. Count me among them. By comparison, Windows is clunky, old-school, requires calls to the IT help desk, and frequent forced power downs when it locks up. This takes lots of time at work when I'm on the clock, but here's no room in my personal life for such annoyances. My latest generation PC doesn't leave the trunk of my car when I'm home.

Corporate CFOs must eventually realize what Windows costs them in lost productivity and expensive support. Now... ask yourself what will happen when businesses finally abandon the failed promises of Microsoft and turns to OS X.

Second point... by most accounts Apple's overall computer market share stands at 6%. Their laptop market share is estimated to be at least twice that much. This is DOUBLE the market share from eighteen months ago, and there is reason to believe this growth will continue. Computers represent a much higher margin item for AAPL.

One downside... Apple computers enjoy a much longer service life than anything running Windows. I've owned Macs exclusively for 22 years. They have at least a six year time in service life and become functionally obsolete much later, so AAPL won't sell replacement computers as frequently as Dell and HP's throwaway junk. Factor that into your purchase cost fatcat.

[beech_35]

Meant to say "frequent calls to the IT help desk". In 22 years of owning Apple products, I have never had to call their tech support. Ever. Try that with your PC.

[jmmx]

@Cyapp

How many different video cards do you want to put into your PC?

I will give you that in the end you may pay a little more due to limited choice, but the question really is "Can you get what you need?" not "Can you get every single possible flavor of what you need?"

I even agree that there may - on very rare ocassiions - be things (esp software - less rare) for which you cannot find a Mac equivalent . Life is not perfect.

But I do see so many people who have moved from PCs to Macs who say :I will never go back" that I have to believe that it is not just us old "fanboys" who agree on the superior experience.

If you are happy with your Win machines - cool - keep to it. Celebrate diversity. Not gonna stop me from being a Mac fan.

@fatcat
Get a Mac Mini - it is a great powerful lil computer. Will do all you need. If you need portability, get a macBook (not pro) or iPod Touch.

Refurb machine DO have standard warrantee. Go for it!

[bajaman2008]

aapl is absolutely the best company out there today, with growth prospects across their entire line of products. When the ATT exclusive runs out, say in 3-5 years, the iphone will explode. In addition, aapl is certainly working on advanced versions that will make the existing iphone seem simple in retrospect. Although Google is also growing and is priced at a similar PE multiple, it is much more speculative. aapl has the products and steady improvements will continue to drive the business. I won't be surprised to see aapl at $300 in 12 months.

[stephenrosenman]

Thanks for all the interesting feedback.
Apple's accounting definitely confuses every analyst and reader out there but the take away message is that most of Iphone revenues and profits do not show up in the quarter they are sold. Comparing yoy sales and profits therefore will always miss about 7/8 of iPhones sales. Apple sold 1.7 million iPhones this quarter. If Apple chose to use the normal method of accounting for these phones, their quarterly revenues would be far greater than the $7 billion declared. To me, that's the best way of looking at the numbers and makes for an even more substantial and accurate beat than actually reported.

[vasu sheth]

Great analysis for a true winner AAPL, with outstanding result something so admirable!

[vasu sheth]

Great analysis for a true winner, AAPL. An outstanding result that deserves reward!