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  • Apple's Think Different Approach To Quarterly Math [View article]
    CoreAndExplore:

    I don’t believe a China Mobile deal is factored into Apple’s guidance should high volume shipments commence at the end of the quarter. I’m working hard on my FQ1 and FY2014 estimates at this time and I’m no stranger to Apple’s deferred revenue accounting.

    Throughout the December quarter I’ll be watching for signs of any easing of iPhone 5s supply constraints and for information on supply levels of the iPad mini with Retina display.
    Nov 2 06:17 PM | 1 Like Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    rdtuck02:

    Please see my response to a similar question from CoreAndExplore.

    As I stated in that response:

    In the first four quarters following Apple’s increase in deferred revenue on each iOS device and Macintosh sold, it will obviously have a material impact and dampen reported revenue and earnings under GAAP. Over time, the higher deferred amounts per unit sold will slightly moderate the seasonal extremes in Apple’s annual revenue and earnings cycle.
    Oct 31 01:47 AM | 1 Like Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    CoreAndExplore:

    I can’t speak for all analysts, but I have not factored a prospective China Mobile deal into my FY2014 forecasts. I would need to know which iPhone models might be made available through China Mobile and when the deal commences.

    For example, if a deal is announced in time for high volume iPhone shipments prior to the beginning of Lunar New Year celebrations that commence on January 31, 2014, my unit sales expectations would be higher than if shipments begin in the spring.

    As the founder of the Braeburn Group, I am in regular and ongoing discussions with members of our global network of independent analysts. All us expect a China Mobile deal to have a material and beneficial impact on Apple’s FY2014 results. Quantifying the impact will occur after the deal and some of the deal terms are announced.

    Concerning deferred revenue accounting, I actively tracked the quarterly impact of deferred revenue in the first years following the initial release of the iPhone and until the retrospective change to iPhone accounting occurred. When the iPhone was first released, all unit sales revenue was deferred over twenty four months from the time of sale.

    In the first four quarters following Apple’s increase in deferred revenue on each iOS device and Macintosh sold, it will obviously have a material impact and dampen reported revenue and earnings under GAAP. Over time, the higher deferred amounts per unit sold will slightly moderate the seasonal extremes in Apple’s annual revenue and earnings cycle.
    Oct 31 01:43 AM | 2 Likes Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    Harbourdrive:

    Apple tends to “walk down” the cost curve as volume rises and new components moderate in price. Also, the application of fixed costs over higher production volume reduces the impact of fixed costs on each device produced.

    Apple’s jump to 64-bit SOCs suggests the company will continue to invest heavily in innovation as the best means possible to sustain leadership in the company’s primary product markets. While some component costs will moderate and manufacturing efficiencies will continue to occur, the costs of innovation and the costs of custom components will continue to pressure margin.
    Oct 31 01:15 AM | Likes Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    Camden:

    Yes. There will be at a minimum a significant drop in the rate of revenue growth for the iTunes/Software/Services segment in the December quarter and an expected decrease of at least $500 million in iPod revenue.

    Please note the forecast $900 million increase in deferred revenue is a sequential increase in the amount deferred, not guidance on the year-over-year increase in the total amount deferred.

    I’m working through the numbers now and the total amount to be deferred in the December quarter, even working within Apple’s revenue guidance range, is quite significant.
    Oct 30 02:00 AM | Likes Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    NicZ:

    The iPad model mix will definitely impact the average selling price for the line during the quarter. Because the iPad Air is being brought to market in a conspicuously lighter and thinner enclosure than the model it replaces and offers users the benefit of 64-bit computing, I expect very strong uptake of the new model.

    The original iPad mini has been reduced in price by $30 while the new iPad mini starts at $399, versus $329 for the original model. I expect a net increase in the line’s ASP for the quarter inclusive of the increase in deferred revenue per unit sold.

    Surprising, Apple has incorporated the A7 64-bit SOC in both new iPad models. This is a technology leap that adds to the value proposition to consumers and will spark strong unit sales in the quarter. The question to be answered is how many of the new iPad minis Apple can produce and ship before the end of the period.
    Oct 29 11:54 PM | 2 Likes Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    Sacto_Joe:

    It will be fascinating to watch supply and demand on the new iPhones and iPads as we move through the quarter.
    Oct 29 11:39 PM | Likes Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    rdtuck02:

    Because Apple provides device buyers with an implied guarantee future software and services will be made available at no cost, a portion of the purchase price must be deferred. The deferred revenue amount on each unit sold is a good faith estimate of the value of that implied guarantee as a percentage of the device’s purchase price.

    The applicable accounting rules were put in place ostensibly to thwart a practice of pre-mature revenue recognition.

    The higher the value of future software and services to be provided, the more revenue that must be deferred at the time the device is originally sold to the consumer.
    Oct 29 11:36 PM | 1 Like Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    VictorHAustin:

    I expect a direct assault on the living room gaming experience with an updated Apple TV. As you mentioned, gaming controllers are coming to market for iOS devices. Opening the living room to iOS developers will dramatically extend the reach of Apple’s global eco-system.
    Oct 29 11:26 PM | 2 Likes Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    kroyals:

    The $900 million is the expected sequential increase in deferred revenue in the December quarter from the September quarter. The deferred revenue in the December quarter will be larger than the expected $900 million sequential rise. The amounts deferred are $40 on each Mac sold and up to $25 on each iOS device sold. I suspect on iOS devices the amount deferred on each unit sold will scale with the price of the device.

    From the conference call:

    “On a sequential basis, given the increased deferral rates that we have, as a result of increase in the software that we are providing to customers for free, coupled with our sequential unit increases, we will defer, we think, about $900 million more in revenue in the December quarter than we deferred in the September quarter.”
    Oct 29 11:22 PM | Likes Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    Michael:

    That’s an insightful observation. The aggressive deferred revenue arrangement may be intended in part to smooth revenue recognition throughout the fiscal year.
    Oct 29 11:12 PM | Likes Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    acsatix:

    I’ll be watching for issues of supply on the iPhone 5s and the new iPad mini throughout the quarter. A couple of wild cards remain in play including the timing of the eventual deal with China Mobile.
    Oct 29 11:09 PM | 1 Like Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    acsatix:

    Production of the iPhone 5s and the iPad mini with Retina display will govern reported unit sales for those models. Due to the production challenges last year with the newly-styled iMac and the refresh of the MacBook Pro line in October, I expect single-digit unit sales growth from the line this year along with a benefit to average selling prices.

    Additionally, the original iPad mini remaining in the market at a lower-price will deliver additional revenue while the new mini will benefit the overall ASP for the product line.
    Oct 29 02:25 PM | 1 Like Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    Lou M:

    The unit sales success of the 5c needs to be viewed in the context of what the iPhone 5 might have delivered in unit sales had it remained in the product line as the midline handset. All the way around, the 5c will have far greater appeal.
    Oct 29 05:23 AM | 1 Like Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]
    Pepo2012:

    Apple has resolved the manufacturing issues with the iMac’s new enclosure and eliminated the challenges that hampered production of the original iPhone 5. i don’t expect any extraordinary warranty accrual set-asides this fiscal year.
    Oct 29 05:20 AM | Likes Like |Link to Comment
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