AAPL Stock: 118.88 ( + 1.13 )

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New accounting rules may boost Apple stock value

updated 12:15 pm EDT, Mon September 14, 2009

Could also remove iPod touch upgrade fees

The US government has tentatively approved new accounting rules which could significantly impact the iPhone, and possibly the iPod touch, says Fortune. Under influence from corporations like Apple, TiVo and Xerox, the government has relented to pressure and made initial changes to regulations involving subscription accounting. Because Apple releases periodic software updates for the iPhone, the company has had to spread relevant revenue reporting across a two-year time period.

In Apple's Q3 2009 results for instance, the company reported GAAP-based earnings per share (EPS) of $1.35. Without GAAP rules, the EPS was in reality $2.14. Future Apple financial reports could more accurately convey Apple's iPhone profits, and hence increase stock value.

The change could also eliminate an inconvenience with the iPod touch. Apple has long claimed that because of accounting rules, it has had no choice but to charge for upgrades to the Touch firmware, like the transition from v2.x to v3.0. The $10 fee could in fact be hindering adoption of newer technologies, and/or sales of v3.x-only titles at the App Store.

The FASB must still issue a final approval for the new rules, which are only in draft form. Apple could implement new reporting policies at the beginning of its next fiscal year, which starts at the end of the month. The company wrote the FASB earlier this month asking for more time, however, and the next FASB meeting on the topic is set for November 18th.

by MacNN Staff



  1. apple4ever

    Joined: Dec 1969


    Bout Time

    I think the rules never required what Apple did (and the law should've never been passed in the first place), but as long as its clarified like this that is good. Now we'll see whether its an excuse or a real reason for what Apple did to Touch owners.

  1. QualleyIV

    Joined: Dec 1969


    Stupid article title for stupid investors

    A change in accounting rules NEVER boosts the VALUE of a stock. A change in accounting rules or practices might change how much profit is reported, it certainly doesn't change how much money a company brought in or spent. Seriously, maybe the person writing about financial news should have at least SOME familiarity with the subject...

  1. testudo

    Joined: Dec 1969


    Re: Stupid title

    It isn't a stupid title, and it's 'correctness' is based completely on stupid investors. If investors see next month's apple numbers skyrocket, they will, in theory, go "OMG! Look at Apple's price skyrocket! Let's jump on board!" without caring why the numbers are what they are. Thus increasing apple's stock price.

    If you're going to complain that the stupid analysts don't understand apple, and the stupid investors who haven't driven the price of the stock to 300 yet don't understand apple, then they're not going to understand this. As such, up-up-up-up-up!

  1. QualleyIV

    Joined: Dec 1969


    Re: Re: Stupid title

    You're confusing stock price with value. I'll grant you that stupid investors could increase the price of the stock, but market cap is not the only way to value a company. If it were, there would be no sense in saying that a stock is over- or under-valued. "Value" is intrinsically different than "price"--you're confusing the two as did the author of the article.

  1. iphonerulez

    Joined: Dec 1969


    Boy, this article is really making the rounds...

    It's not doing much for Apple share price, but it really gets the fanboys excited thinking they may wake up one morning and see Apple shares $60 higher or something. Well, this is the second day I've seen this article and Apple shares are up $.60, so maybe investors really are jumping on the the Apple Space Shuttle to the stars. XD I'm curious to see if Apple can cut a deal with China Mobile and that will give the stock price a nudge higher. Though I'm sure somebody will say that deal is already baked into Apple's current share price. Outside of the iPhone, there doesn't seem to be any product on the horizon to give Apple shares a significant boost. The rumored tablet that may or may not exist is already being called a failure, so I'm not counting on that for significant revenue.

  1. TheSnarkmeister

    Joined: Dec 1969



    I thought the Obama Administration was going to put a stop to corporations running rough shod on Washington, telling the government what to do, and manipulation their stock values through regulation manipulations?

    How's that "Change We Can Believe" In working our for you?

  1. elroth

    Joined: Dec 1969


    re: impressive

    We're a bit bitter, aren't we? Time for your nap now.

    Read the actual facts of the accounting rule and the story - it has nothing to do with corporations running Washington. It basically simplifies things - if you sell a product now, you account for it now, instead of spreading the revenue out (accounting-wise) over a two-year period.

    The current rule says that if you account for all the revenue now, you can't give users any extras for free in the future - in Apple's case, that means adding new features to the software of already-sold products. So Apple had to spread out the revenues accounting-wise for the iPhone (so it could add new features for free), and charging for new features for the Touch (because they accounted for the revenue all at once.

    As far as changing the stock price, it won't, at least not in the long term.

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