Wednesday, April 23, 2008

Apple Earnings Call

In the Seeking Alpha Apple Earnings transcript, Peter Oppenheimer answers a question about delayed iPhone revenue recognition:
"We are doing this -- as I said in my prepared remarks -- because we announced specific new features that will be included in the iPhone 2.0 software that we plan to provide for customers for free who purchased after our announcement on March 6th. So we will delay revenue recognition on phones sold between March 6th and the date of the delivery of the software."
Apple announced the iPhone 2.0 beta on March 6th and stopped recognizing revenue on iPhones sold from that date forward. iPhone 2.0 is focused on 3rd party and business applications. It includes the SDK as well as support for Microsoft Exchange ActiveSynch and Cisco IPsec VPN. Apple will offer this as a free software upgrade to all iPhone users in June. They will probably release the software during their Worldwide Developers Conference on June 9-13. I wouldn't be surprised if they announced the 3G phones at the same time. I wonder if Apple is also delaying revenue recognition of the $299 per year Enterprise Program.

Another good question, from Andrew Neff, of the soon to be gone Bear Stearns:
"Any further thoughts on cash use, what you are going to do with all that cash?"
To which Peter Oppenheimer responded:
"We're going to buy Yahoo."
Just kidding.

More on the iPhone supply (or lack thereof), from Timothy D. Cook:
"iPhone again, we really outstripped our supply toward the end of the quarter because we sold more than we had expected. We thought there would be a -- more of a sequential decline there than there was. It was reasonably strong throughout but March in particular was strong."
That's good news. If March in particular was strong, and they are not recognizing the revenue of iPhones sold since March 6th until June, we may see a large boost in the third quarter to account for all the iPhones sold after the 2.0 announcement.

Shaw Wu, the Yahoo board's infamous analyst, asked for comments about Apple's recent purchase of PA Semi and was given a non-answer. He promptly disappeared.

Sources:
1. Apple F2Q08 (Qtr End 3/29/08) Earnings Call Transcript
2. Apple Announces iPhone 2.0 Software Beta

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