updated 03:30 pm EDT, Wed September 23, 2009
May have large impact on Apple investors
The Financial Accounting Standards Board has officially certified a change in GAAP accounting rules, one which could significantly influence Apple stocks, the Wall Street Journal writes. A draft measure of the change was completed earlier this month, after pressure from corporations including Apple, TiVo and Xerox. As a result, businesses selling hardware linked to subscription services should now be able to report earnings as they are produced, instead of over an extended period.
In the past Apple has been forced to use subscription accounting for several products, most notably the iPhone. Despite being one of the company's most successful ventures, official iPhone revenues are far below those actually generated, to extent that the company may have underestimated its overall third-quarter revenues by $1.4 billion. Earnings per share may have been undervalued by 58 percent, or $0.78.
With more accurate reporting the value of Apple stock could be pushed upwards, though analysts suggest that most professional investors are already factoring in non-GAAP revenues. The shift may also remove the upgrade fees imposed on iPod touch firmware, something Apple has normally blamed on GAAP. Other products affected by subscription accounting include the Apple TV and the AirPort Extreme.