Did Apple (AAPL) Issue a Quasi-Warning?
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Price: $444.36 +0.50%
Overall Analyst Rating:
BUY (= Flat)
Dividend Yield: 2.7%
Revenue Growth %: +11.2%
Overall Analyst Rating:
BUY (= Flat)
Dividend Yield: 2.7%
Revenue Growth %: +11.2%
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With its iPhone 5 announcement this morning, did Apple (Nasdaq: AAPL) issue a quasi-warning? That's what some market watchers are saying.
Included in its release that it sold 5 million iPhones 5s in the opening weekend, Apple said "while the majority of pre-orders have been shipped to customers, many are scheduled to be shipped in October."
So what's the big deal about a push out or a few weeks? Well, Apple's fourth quarter ends on September 29th. This means there is a risk that the company could miss some bloated expectations for iPhone units and sales in the quarter. Many analyst expect 10 million+ iPhone 5s in the quarter, so double the current amount sold. With supply limited, this could be a difficult feat.
Also important, this is how Apple describes Revenue Recognition:
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers recognition of revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit.
With Apple saying "many are scheduled to be shipped in October," and based on the description above, this means revenue cannot be recognized in the fourth quarter.
With all this being said, if demand remains robust for the new iPhone the company will more than make it up next quarter. Still, on Wall Street, where quarter-to-quarter performance matters - sometimes too much - this is something investors need to brace themselves for.
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Included in its release that it sold 5 million iPhones 5s in the opening weekend, Apple said "while the majority of pre-orders have been shipped to customers, many are scheduled to be shipped in October."
So what's the big deal about a push out or a few weeks? Well, Apple's fourth quarter ends on September 29th. This means there is a risk that the company could miss some bloated expectations for iPhone units and sales in the quarter. Many analyst expect 10 million+ iPhone 5s in the quarter, so double the current amount sold. With supply limited, this could be a difficult feat.
Also important, this is how Apple describes Revenue Recognition:
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers recognition of revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit.
With Apple saying "many are scheduled to be shipped in October," and based on the description above, this means revenue cannot be recognized in the fourth quarter.
With all this being said, if demand remains robust for the new iPhone the company will more than make it up next quarter. Still, on Wall Street, where quarter-to-quarter performance matters - sometimes too much - this is something investors need to brace themselves for.
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