IBM iPod Revenue Recognition

There was a recent article in Kiplinger’s magazine talking about some undervalued stocks (not exactly sure the title)… The articled highlighted IBM and there were a couple of things I had a question on. It stated that IBM recognizes expenses from sales of its iPod’s immediately, but delays the revenue recognition (spreads it out) over a 2-year period? Is that accurate and even possible? If I can find the article online, I’ll post it…

wtf?

Yes, IBM recognizes the sales of it’s ipods on the comprehensive cashflow statement next to the 8Q currency footnote. It’s a LIFO/FIFO thing.

I would be less concerned with HOW IBM is recognizing iPod sales/expenses and more concerned with WHY IBM is recognizing iPod sales/expenses.

Seriously this thread gets the WTF award

Can’t anyone ask a question on here without getting a comment like that ^? Okay, forgive me, I wrote IBM, instead of AAPL!

Thats not a small typo ^^^^^^

Okay, so I apologize, it was an honest mistake… Back to my original question though, with the right symbol: It stated that AAPL recognizes expenses from sales of its iPhones/iPods immediately, but delays the revenue recognition (spreads it out) over a 2-year period? Is that accurate and even possible?

It may be possible for some of the revenue related to the contract with at&t for the iPhone but completely impossible for the iPod.

Thank you! That makes sense. If you were analyzing AAPL as a potential investment, would you recognize that as a good thing, all else being equal? I’m just trying to figure out how it looks from the analyst side…

That would be a trivial detail in my analysis of apple. Apple sucks as a stock because it’s expensive as hell. To justify it’s share price relative to an index fund, you’d have to assume it will keep growing at it’s current rate for the next 5 years. Will apple’s revenue in 2012 be $87 billion? Assuming stable margins, that is what it would take to justify the share price.

Thank you for your explanations!

“IBM iPod Revenue Recognition” Fail

Epic Fail.

soxboys21 Wrote: ------------------------------------------------------- > Thank you! That makes sense. > > If you were analyzing AAPL as a potential > investment, would you recognize that as a good > thing, all else being equal? > > I’m just trying to figure out how it looks from > the analyst side… Considering you don’t pay for iPods or iPhones in installments, there must be a liability on their books relating to this and of course this is already factored into earnings estimates. It’s not like they’ve 1bln in their back pocket just waiting to decide which Q to hit it on. Unless of course they’re akin to Xerox or Enron. Take a read through some software company’s 10k revenue recognition footnotes. If you feel the need to dig further from there good luck to you.