Mark Connolly

Apple's FY Q3 Guidance Too Low, According To Analysts

btw, the fee from T is estimated to be $3-$8/mos for each 2 yr contract obtained by T!

Apple's FY Q3 Guidance Too Low, According To Analysts

Do any of the analyst that are including iPhone sales revenue in their 2nd (especially) and 3rd qtr estimates read the 10Q's? Apparently not, otherwise they would be aware that Apple is recognizing net revenue from iPhone sales over a 24 month period. Also, why do you think Apple did not allow sales of the iPhone to commence until 6:00 PM (each timezone too) on Fri June 29th? Could it be that was after the close of business for the QTR? In other words, I believe there will be NO iPhone sales included in the 2nd Qtr for which earnings are being released on the 25th. Even if they are included only 1/24th of the net revenue would be recognized. Hardly a major impact on the qtr's earnings. The fee paid to AAPL by T will be the major source of "no-cost" earnings which will impact the next qtr, however.

iPhone Earnings Could Push Apple Above $200/Share

Have you investigated the monthly fee for a Crackberry? $100/mos for the Iphone would be a deal in comparison (as long as the product meets most expectations). Touch screen stability and repair life still has me a bit concerned, however. Look for AT&T to work with AAPL (probably have a provision in the royalty agreement already) to "soften the blow" from customers who must switch from another provider. What AAPL doesn't already know about marketing a cellular provider and burying fees, AT&T sure does. Jobs has, since day 1, marketed his products exclusively. Almost like saying if you want a Lexus, we're here for you. Want a Chevy? You probably need to look elsewhere. That theory has been debated for over 20 years now and just like religion and politics, there are good arguments on both sides.

iPhone Earnings Could Push Apple Above $200/Share

True about the "subscription" revenue recognition over a rolling 24 mos period. One item you overlooked is the 24 mos recognition accounting procedure will be recognizing net revenue from iphone sales i.e. Gross - cost of sales (cost of sales will also include the amortization of capitalized R&D incurred over the projected life of the product....amazingly the projected life of the iphone = 24 mos!!). I also believe sometime before the two years elapses an accounting statement issued by AAPL's auditors will be released saying it is no longer necessary to amortize the monthly net revenue from the Iphone due to no need for additional software enhancements or upgrades. Still, there will be a lag to the P&L for an extended period, but if the AT&T deal is as good as discussed that revenue should provide nice cover for the delay in rev recognition. Starting in July of 09 the monthly iphone revenue annuity along with all other product sales SHOULD make this a $200 stock then, if not earlier.