Apple posts $6 billion profit in Q1 earnings call

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Date: Tuesday, January 18th, 2011, 14:56
Category: Finance, News

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Apple Inc. announced Tuesday that first quarter profits rose more than 77% to US$6 billion, or US$6.43 per diluted share, driven by record sales in three of its four major product categories, thereby beating analysts’ predicted earnings in the process.

Per AppleInsider, the company also posted record revenue of US$26.74 billion for the three-month period ended December 25, 2010, or more than US$2 billion above consensus estimates. The results compare to revenue of US$15.68 billion and net quarterly profit of US$3.38 billion, or US$3.67 per diluted share, in the year-ago quarter.

Apple sold 4.13 million Macs during the quarter, a 23% unit increase over the year-ago quarter. The company also sold 16.24 million iPhones in the quarter, representing 86% unit growth over the year-ago quarter. iPod sales during the quarter totaled 19.45 million, representing a seven percent unit decline from the year-ago quarter, while iPad sales came in at 7.33 million units.

“We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales,” said Apple Chief Executive Steve Jobs. “We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on.”

Gross margin was 38.5% compared to 40.9% in the year-ago quarter. International sales accounted for 62% of the quarter’s revenue.

“We couldn’t be happier with the performance of our business, generating $9.8 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2011, we expect revenue of about US$22 billion and we expect diluted earnings per share of about US$4.90.”

Stay tuned for additional details as they become available.

Apple to release Q1 financial results on January 18, 2011

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Date: Tuesday, December 28th, 2010, 05:00
Category: Finance, News

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Apple has revealed that it will publish the financial results of its first fiscal quarter of 2011 on Tuesday, January 18, with a conference call to discuss the results following immediately after.

Per AppleInsider, the news was posted to Apple’s investor website along with the notice that a link to the conference call webcast “will be provided at a later date.” Apple will make the results public at 5:00 p.m. Eastern time, 2:00 p.m. Pacific, following the close of the stock market.

The results, which will include the holiday season, are largely expected to be record-breaking.

Apple’s fourth fiscal quarter of 2010 results impressed Wall Street analysts, though limited supply of the iPad resulted in disappointing sales figures for the tablet device. The company’s profits soared 70% year-over-year to $4.31 billion, driven by record sales of iPhones, Macs and iPads.

The iPhone maker projected in October that it will earn US$23 billion in revenue and post diluted earnings per share of about US$4.80 for the upcoming first fiscal quarter.

Analyst Shaw Wu of Kaufman Bros. predicts that Apple will sell 4.2 million Macs, 6.1 million iPads, 16 million iPhones and 17 million iPods in its first fiscal quarter of 2011.

Stay tuned on the 18th for additional details as they become available.

Apple posts over $20 billion in sales, $4.31 billion profit for fourth quarter

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Date: Tuesday, October 19th, 2010, 06:56
Category: Finance, News

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Apple on Monday reported a “great fiscal quarter,” citing a quarterly profit of US$4.31 billion, compared to US$2.53 billion for the same period last year. Over the quarter, Apple recored US$20.34 billion in revenue, an increase of nearly 67 percent from the year-ago quarter’s sales figure of US$12.21 billion.

Apple’s earnings of US$4.64 per diluted share handily beat estimates by Wall Street analysts who were expecting the company to report earnings of US$4.06 a share on $18.86 billion in revenue for September quarter.

“We still have a few surprises left for the remainder of the calendar year,” said CEO Steve Jobs in a statement accompanying the earnings. Apple has scheduled a press event for this Wednesday where the company is expected to focus on the Mac.

Per Macworld, Apple executive Peter Oppenheimer credited record iPhone sales, enthusiasm for the iPad, and a new quarterly sales record for Mac sales as the drivers behind Apple’s strong quarterly performance. In particular, Apple sold 4.19 million iPads during the first full quarter of sales for the tablet; all told, the company sold 7.5 million iPads during its 2010 fiscal year.

For the fiscal fourth quarter, Apple recorded US$2.8 billion in sales of iPads and related accessories, with the iPad accounting for US$2.7 billion of that figure. That translates to an average selling price of around US$645 for the tablet, Oppenheimer said.

iPad sales may disappoint some analysts, who were expecting Apple to sell close to 5 million tablets. One of the issues may be with inventory—Apple says it has three-to-four weeks worth of channel inventory, which is below its target range of four-to-six weeks. The company plans to expand its iPad distribution efforts, adding retailers like Verizon, Walmart, Target, and AT&T into the mix as well as launching in additional countries.

As for the iPhone, Apple managed to sell 14.1 million units during the quarter. This marks a 91% increase over the 7.4 million phones sold during the year-ago quarter and a new quarterly record for smartphone sales for the company.

For the 2010 fiscal year, Apple sold 40 million phones, a 93 percent jump over 2009. During September, the company says it passed the 125 million mark for cumulative iOS sales of its iPhone, iPad, and iPod touch offerings.

Apple also saw a record quarter for its Mac business. The company sold 3.89 million computers, up 27% from its year-ago sales. Fourth-quarter Mac sales topped the previous high-water mark of 3.47 million mark set during the June quarter. Year-over-year sales growth was more than double the growth rate projected for the overall PC market by research firm IDC, according to Oppenheimer.

Notebooks continue to drive Mac sales, with portable products, accounting for 71% of the Macs sold during the September quarter. However, sales of desktops rose nearly 28% to a little more than 1 million units, on the strength of the company’s iMac and Mac Pro updates over the summer.

Despite the largely positive news, the iPod segment continues to shrink, with Apple selling 9.05 million music players during the quarter (an 11% drop from last year’s figures). Apple updated its iPod line in September, though the company usually sees the fruits of those efforts during the holiday quarter.

While iPod sales growth stalled throughout 2010, Apple opted to focus on the positive Monday. It noted that the iPod’s share of the MP3 player market in the U.S. continues to top 70% according to research firm NPD’s figures. And Apple says its music player gained market share internationally from the year-ago quarter. The company also reported that its iTune Store brought in more than US$1 billion in revenue for the September quarter.

Apple CEO Steve Jobs took a minute during the conference call to comment on the company’s “hobby” product, the Apple TV, announcing that it had moved more than 250,000 units since the device went on sale. That’s the first time the company has ever revealed sales information for the device, which has gone through a number of iterations since its original introduction in 2007. Jobs confirmed that Apple had moved to an all-streaming model for content for the device, which will allow streaming of media from iOS devices in November when Apple ships iOS 4.2.

Apple’s retail segment had what Oppenheimer called a “record-breaking quarter,” with revenue rising 75% to US$3.57 billion. Apple sold 874,000 Macs through its retail arm, an increase of 30% from the year-ago quarter. The company sales that half of the Macs sold through its brick-and-mortar outlets continue to be to customers who are new to the platform.

Apple ended the fourth quarter with 317 stores, 84 of which were outside the U.S. The company opened 24 new stores during the quarter, with 16 of those opening outside of U.S. borders. In fact, with new store openings in Spain, Apple now has retail outlets in 11 countries.

The company also stated that it plans to open 40 to 50 stores during the coming fiscal year, with half of those slated for outside the U.S. The company also plans to start renovating several of its U.S. stores during 2011.

Monday’s earnings report closes the book on Apple’s 2010 fiscal year, which saw the company record US$65.2 billion in sales, a 52% increase from the US$42.9 billion in revenue recorded in 2009. Apple turned a US$14 billion profit in 2010, an increase of 72% from the previous year.

“The September quarter was the culmination of a monumental year for Apple,” Oppenheimer said.

Apple cites $15.7 billion in sales, $3.25 billion profit for 2010 Q3 financial report

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Date: Wednesday, July 21st, 2010, 04:37
Category: Finance, News

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Apple generated its best quarter to date, reporting US$15.7 billion in sales and a profit of US$3.25 billion yesterday with shares accelerating US$3.51 per share, up 75% in the year over year from the same period in 2009. The company’s results beat analyst expectations of $3.10 a share and $14.74 billion in revenue according to Macworld.

The company sold a record 3.47 million Macs during the three-month period ended June 26, 2010, another quarterly record for the company that topped the previous high sales mark by 100,000 units. Mac sales increased 33% over the 2.6 million units Apple sold in the third quarter of 2009. Oppenheimer noted that Apple’s 33% sales growth topped the 22% growth rate market research firm IDC projects for the overall computer market.

As expected, portables drove Mac sales for the three months ending in June. Of the 3.47 million Macs sold, 71% were laptops.

The third quarter also marked the first full quarter of sales for the iPad, Apple’s new tablet. Apple said it sold 3.27 million iPads during the quarter with the company seeing US$2.17 billion in recognized revenue from iPad sales during the quarter. The tablet is currently shipping in 10 countries, and Apple plans to introduce the iPad to 9 more countries on July 23rd. The company also stated that it’s selling iPads just as fast as it’s making them, while attempting to increase manufacturing capacity.

Apple sold 8.4 million iPhones in the third quarter, a 61% jump over last year’s figures. The iPhone 4, which debuted in the waning days of the third quarter, made up about 20% of those sales—or more than 1.7 million units. Apple called the iPhone 4 launch the most successful product launch in its history.

Consumer demand for the new phone has been so great, in fact, that Apple has had trouble filling orders. Last month, the company announced that it would delay the release of the white iPhone 4—it’s expected to ship by the end of July. iPhone 4 orders placed through Apple’s online store list a three-week shipping wait as of this writing. (In contrast, the 8GB iPhone 3GS ships within 24 hours.)

Apple saw recognized revenue from its handsets of US$5.33 billion during the quarter, up 74% from last year’s figures. Apple says the iPhone has a sales value of US$5 billion, for an average selling price of US$595.

Combining the sales of the iPhone, iPad, and iPod touch, Apple sales there are now 100 million devices running its iOS mobile operating system.

iPod sales fell during the third quarter of 2010. Though the company sold 9.41 million iPods, the figure represented an 8% drop from the 10.2 million music players Apple sold in the year-ago quarter. The iPod segment has seen declining growth for some time now, particularly outside of the holiday shopping season. During the fiscal second quarter, iPod sales dipped by 1% while the 2009 third quarter saw a 7% decline in sales.

Despite the decline, the music device remains the top-selling MP3 player internationally and continues to command a 70% market share in the U.S. More significantly to Apple, the iPod touch continues to grow with Apple stating that sales of that product were up 48% from the year-ago quarter, leading to a 12% increase year-over-year in average selling price for the music player. Apple’s iPod segment saw quarterly revenue of US$1.5 million, a 4% increase from last year.

With regard to the iTunes Store, Apple cited more than $1 billion in revenue, a growth rate of 25% year over year. The mobile app segment of the store has grown to 225,000 apps, with 11,000 specifically built for the iPad. Users have download more than 5 billion apps from the App Store, Apple says.

Apple ended the third quarter with 293 Apple Store locations, the company opening seven more during the three-month period. Four of those new stores were opened in the U.S., while two opened in Australia; the remaining new store was in Canada.

Retail stores generated US$2.58 billion in revenue during the quarter, jumping 73% from the year-ago numbers. Apple sold 677,000 Macs via its retail stores, compared to 492,000 last year; half of the Macs sold at Apple Store were to customers new to the platform, Apple says.

Apple plans to open 24 stores during the fourth quarter. In addition to an outlet in Shanghai, China, that opened earlier this month, noteworthy store openings include ones in Paris, London, and Apple’s first two stores in Spain.

Apple ended its fiscal third quarter with US$45.8 billion in cash and short-term investments, up from US$41.7 billion at the end of last quarter.

For the fiscal fourth quarter ending in September, Apple expects revenue of US$18 billion and earnings per share to come in around US$3.44. Analysts were predicting sales of US$17.03 billion and earnings of US$3.82 per share in advance of Apple’s announcement on Tuesday.

Apple said it would defer revenue during the quarter as a result of its decision to offer free cases to iPhone 4 customers. Last week, the company made its free case offer after reports of reception problems related to the placement of antennas in the iPhone 4. Oppenheimer put the cost of the case giveaway at US$175 million; Apple will recognize the cost of those cases as they’re delivered to customers.

Apple posts Q2 revenue of $13.5 billion, profit of $3.07 billion

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Date: Tuesday, April 20th, 2010, 15:06
Category: Finance, News

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Delivering its second quarter financial results on Tuesday, Apple announced that the company sold 10.89 million iPods during the quarter (compared to sales of 11.01 million iPods in the year-ago quarter, and down 48% from the previous quarter) and 8.75 million iPhones in the quarter (a 131% increase year-over-year, and up from 8.7 million units in the prior quarter).

Per iLounge, Apple posted revenue of US$13.5 billion and net quarterly profit of US$3.07 billion, or US$3.33 per diluted share, compared with revenue of US$9.08 billion and net quarterly profit of US$1.62 billion, or US$1.79 per diluted share in Q2 2009.

International sales accounted for 58% of the quarter’s revenue and sales of Other Music Related Products + Services were up 27% from the year-ago quarter, and 14% from Q1 2010, to US$1.3 billion total.

Notably, the numbers from Q2 2009 are different from those originally reported due to Apple’s change in accounting rules that sees the company now recognize “substantially all of the revenue and product costs from the sales of iPhone and Apple TV at the time of sale,” instead of accounting for the sales over a 24-month period.

“We’re thrilled to report our best non-holiday quarter ever, with revenues up 49% and profits up 90%,” said Steve Jobs, Apple’s CEO. “We’ve launched our revolutionary new iPad and users are loving it, and we have several more extraordinary products in the pipeline for this year.”

“Looking ahead to the third fiscal quarter of 2010, we expect revenue in the range of about US$13.0 billion to $13.4 billion and we expect diluted earnings per share in the range of about US$2.28 to US$2.39,” said Peter Oppenheimer, Apple’s CFO.

Apple Posts $3.38 Billion Profit, $15.68 Billion in Sales for Q1 Results

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Date: Tuesday, January 26th, 2010, 07:56
Category: Finance, News

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Even if the global economy’s in iffy shape, you can’t tell it by Apple.

Per Macworld, the company posted its best-ever performance for the first fiscal quarter, citing tallied sales of US$15.68 billion and a net quarterly profit of US$3.38 billion. That compares to year-ago figures of $11.88 billion in sales and US$2.26 billion in net quarterly profit.

“We’re extremely pleased with our record-breaking performance, including our 32% in growth in revenue and 50% growth in net income,” Apple chief financial officer Peter Oppenheimer told analysts during a Monday afternoon conference call to discuss Apple’s quarter numbers.

The company’s quarterly performance translated to earnings of US$3.67 per share, up 47% from the US$2.50 per share that it earned in the year-ago quarter.

Apple’s reports, which may seem a bit off in comparison to last January’s returns, reflect the retrospectively adopted Financial Accounting Standards Board’s amended accounting standards during the 2010 first quarter. Adopting those standards significantly alters how Apple accounts for certain items such as the iPhone and Apple TV sales. The revised standards allow Apple to recognize revenue and product at the time of sale and the company has restated its results for the 2007, 2008, and 2009 fiscal years to reflect this change.

“We believe [the new accounting rules] will better enable us to recognize the underlying economics and performance of our business,” Oppenheimer said.

For the 2010 fiscal first quarter, Apple sold 3.36 million Macs, up 33% from the 2.5 million units the company sold in Q1 of 2009.

The Mac sales figure sets a new record, topping the 3.05 million Macs Apple sold during the fiscal fourth quarter of 2009.

The fall revamp of the iMac line helped boost desktop sales for the quarter. In October, Apple replaced its 20″ and 24″ iMacs with new 21.5″ and 27″ configurations of the all-in-one desktop. Apple sold 1.23 million desktops in its first quarter of 2010, an increase of nearly 70% from the 728,000 desktops it sold a year ago.

Notebook sales came in at just under 2.13 million units sold during the first quarter, a number which accounts for 63% of all the Macs sold during the quarter. Portable sales rose 18% from the 1.796 million laptops Apple sold in the year-ago quarter.

Overall education sales for Mac products grew 16% from last year, reflecting Apple’s best growth rate in that segment since before the start of the current recession, according to chief operating officer Tim Cook. The K-12 and higher-education channels both reported record sales for the December quarter.

“Our whole education business is based on really understanding teaching, learning, and student achievement, and we think we’re the only tech company that really gets that,” Cook said.

iPhone sales reached record heights in the quarter with the company selling 8.7 million iPhones in three months, breaking the record of 7.4 million set in the previous quarter. iPhone sales were twice what they were during the previous year’s first quarter with the sales value of those 8.7 million iPhones exceeding US$5.4 billion. The average selling price of iPhone models was down 5% versus the prior year, likely owing to the existence of the cut-rate US$99 iPhone 3G model.

In response to a question from an analyst, Cook offered praise for often-criticized U.S. wireless partner AT&T. “AT&T is a great partner,” he said. “In the vast majority of locations, we think iPhone customers are having a great experience… AT&T has acknowledged that they’re having a few issues in some cities, and they have plans to address these. We have personally reviewed these plans, and we have high confidence [in them].”

Regarding Apple’s acquisition of Quattro Wireless, a mobile advertising company, Cook said that Apple “look[s] forward to providing developers with a great opportunity for advertising,” but that mobile advertising is currently “in its infancy.”

Not every product segment saw growth during the quarter and iPod sales fell 8% from Q1 of 2009, as Apple sold 21 million music players during the quarter. However, Oppenheimer characterized that decline as expected. Indeed, overall iPod sales growth has been flat for some time—sales have declined for three consecutive quarters now.

Still, Apple executives didn’t sound particularly bothered on Monday by the iPod’s quarterly performance. The music player continues to gain market share internationally, and its share of the U.S. market remains at more than 70%, according to Oppenheimer.

Despite the lower iPod numbers, Oppenheimer said Apple sold 55% more iPod touches this year than it did in the first quarter of 2009. The average selling price of the iPod increased by 9% during the quarter, driven by sales of the touch.

Oppenheimer told analysts on Monday that the iTunes Store had enjoyed a “record-breaking quarter,” though the company provided no revenue figures for its online retail arm for music, movies, TV programs, and mobile apps.
Retail and other figures

Apple finished the first quarter with 283 retail stores, after opening 10 new outlets during the quarter. Those openings included high-profile stores near the Louvre in Paris and New York’s Upper West Side. Apple also remodeled 32 stores during the quarter, for a total of 100 remodels during the 2009 calendar year.

Retail revenue rose 17% to US$1.97 billion for the quarter. Average revenue per store was US$7.1 million, up from US$7 million in the year-ago quarter. The brick-and-mortar stores sold a record 680,000 Macs, with half of those sold to customers who were new to the Mac.

Apple is expected to open between 40 and 50 stores during the 2010 fiscal year, Oppenheimer said, with half of those outlets located outside the U.S.

Even after a quarter of cash outlays that included the purchase of online music streaming company Lala, the company reported that it now holds cash and short-term investments totaling US$39.8 billion, up $5.8 billion from the previous quarter.

Looking ahead to the March quarter, Oppenheimer told analysts to expect sales between US$11 billion and US$11.4 billion. That compares to restated sales of US$9.1 billion for the fiscal second quarter of 2009. Apple expects earnings between US$2.06 and US$2.18 per share for the upcoming quarter; that compares to US$1.79 per quarter a year ago, after adjusting for the new accounting rules.

“The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about,” CEO Steve Jobs said in a statement accompanying Monday’s earnings release.

Apple Posts US$1.67 Profit for Q4 2009

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Date: Tuesday, October 20th, 2009, 04:57
Category: Finance, News

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In spite of a sagging global economy, Apple posted the results to its most profitable quarter ever, the company setting records for both Mac and iPhone sales. According to Macworld, the company reported a net profit of US$1.67 billion, or US$1.82 per share, on revenue of US$9.87 billion for its fourth quarter earnings.

Comparing those numbers to Apple’s year-ago figures, quarterly profits rose 46%, while earnings per share jumped 44%. Revenue increased 25% from the September 2008 quarter. At the end of the corner, the company had US$34 billion of cash on hand.

For the full 2009 fiscal year, Apple’s revenue rose 12% while its income increased 18% from 2008, according to chief financial officer Peter Oppenheimer. Those increases come during what the Apple executive called “extraordinary challenging times” which have done little to slow the company’s growth.

“We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said Apple CEO Steve Jobs in a statement accompanying the earnings announcement. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.”

For the December quarter, Apple told analysts to expect between US$11.3 and US$11.6 billion in sales and earnings ranging from US$1.70 to US$1.78 per share. This guidance was given without accounting for a rule change in the way Apple recognizes revenue from the iPhone and Apple TV. Apple was uncertain when it would adopt the new accounting method, which was OK’d by the Financial Accounting Standards Board last month.

Over the course of the quarter, Apple sold 3.05 million Macs during the quarter (a 17 percent increase over what it sold for the same three-month period in 2008). That 3.05 million figure sets a record for Mac sales, topping the previous high-water mark of 2.61 million Macs sold during the fiscal fourth-quarter of 2008.

During the quarter, Apple sold nearly 2.3 million notebooks, with portables accounting for an astounding 74% of the Macs sold during the last three months.

“Last quarter was the quarter of the portable,” chief operating officer Tim Cook said during a Monday conference call to discuss Apple’s earnings. In response to one analyst’s comment that “the [laptop] price cut worked,” Cook responded loudly, “Yes, it did!”

Cook also said that Snow Leopard sales were stronger than Apple expected, with twice as many sales of Snow Leopard upgrades during the operating system’s first five weeks on sale than Leopard made during its first five weeks.

iPhone sales rose 7% from the year-ago quarter to nearly 7.4 million units. That compares to a little less than 6.9 million iPhones in the September 2008 quarter—a three-month period that saw Apple roll out the iPhone 3G in a number of markets around the globe.

For the quarter, Apple reported recognized revenue from iPhone handset sales of $2.3 billion, a 185% jump from US$806 million in last year’s fourth quarter.

If Apple had any disappointments in the quarter, it would be in its iPod business, where sales of the handheld music players fell 8% from the year-ago quarter to 10.2 million units. It was the second consecutive quarter where Apple saw iPod sales drop from the year-ago period.

However, Apple saw signs for optimism in its iPod numbers. According to the company, 50% of recent iPod buyers were purchasing their first iPod. What’s more, sales of the iPod touch doubled when compared to the same quarter a year ago, and Apple believes it can attract even more customers to the widescreen music player after cutting the price of the 8GB iPod touch to $199 last month.

“We believe the iPod lineup is attractive positioned for the holiday buying season,” Oppenheimer told analysts during Monday’s conference call. And that’s critical for Apple, which traditionally sees its highest iPod sales during the December quarter. In the December 2008 quarter, for example, Apple sold 22.7 million music players.

Apple Could Receive FASB Approval for Accounting Changes, Remove iPod Touch Upgrade Fees

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Date: Friday, September 18th, 2009, 04:34
Category: Finance, News

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If you’ve ever been irked at the small charges you’ve had to pay for an iPod touch software upgrade, this may be about to go by the wayside. According to Ars Technica, a rule governed by the Financial Accounting Standards Board, that’s been heavily lobbied for by Apple and other electronics companies, may be enough to lift the charge that iPod touch owners have had to pay for updates of significant features to their devices. The rule focuses on “subscription accounting”, or devices that gain “significant new functionality” after their sale, like the iPhone, have to be reported over a series of years rather than all at the same time (presumably because the revenues associated with the product were the result of a series of updates, not just one lump sum).

In the case of the iPhone, subscription charges associated with them over two years round out the criteria. The iPod touch is different and because Apple doesn’t want to report the sales of those devices over a period of time, they’ve had to charge minimum fees for updates in the form of the US$10 and other fees that iPod touch owners have paid for the firmware updates. But if the new rule receives FASB approval, then Apple would be able to report sales of the iPod touch all together without having to worry about charging for updates, as well as the dual GAAP and non-GAAP reporting we’ve heard on their conference calls.

Such a chance could also help Apple’s stock price (seeing all of the iPhone’s sales at once would boost investor confidence), and it would help developers who are asking all users of both the iPhone and iPod touch to update right away, as they wouldn’t have to wait until users found the few bucks in question before downloading a large new update.

Apple to Release Q3 Financial Results Today

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Date: Tuesday, July 21st, 2009, 05:34
Category: Finance, News

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It’s that time again and Apple has released a media advisory stating that the company will be releasing the financial results for the third fiscal quarter and second calendar quarter of 2009. The results will cover sales from March 28th, 2009 through June 26th, 2009, and will be released at the close of trading (4:00 PM Eastern / 1:00 PM Pacific) on Tuesday.

The conference call discussing the results will follow at 2:00 PM Pacific and will be available via an audio webcast.

Stay tuned to PowerPage throughout the day for updates galore.

Nvidia Admits to “Ongoing” Failure Problem in Some Notebooks During SEC Filing

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Date: Thursday, May 21st, 2009, 08:22
Category: Finance

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Graphics processor firm Nvidia formally stated that some notebooks utilizing its chips continue to have “failure” issues, in a filing with the Securities and Exchange Commission on Wednesday.
Per cnet, Nvidia stated that though it does not continue to see “abnormal failure rates” in systems using Nvidia products,” some notebooks are still affected.
“We continue to not see any abnormal failure rates in any systems using Nvidia products other than certain notebook configurations. However, we are continuing to test and otherwise investigate other products,” Nvidia said, adding, “there can be no assurance that we will not discover defects in other MCP or GPU products.” (MCP stands for Media and Communications Processor; GPU stands for Graphics Processing Unit.)
On July 2 of last year, Nvidia announced that the company was planning to take a one-time charge to cover costs associated with problems with materials used in certain versions of its laptop graphics chips. Subsequently, a US$196 million charge was recorded in the second quarter of its 2009 fiscal year to “cover anticipated customer warranty, repair, return, replacement and associated costs” with the problem.
In the company’s 10-Q filing, Nvidia cited a “balance of US$145.7 million associated with incremental repair and replacement costs from a weak die/packaging material set.” and “US$31.2 million for the three months ended April 26, 2009 in payments related to the warranty accrual associated with incremental repair and replacement costs from a weak die/packaging material set.”
Nvidia paid or incurred US$50.3 million against the original “warranty accrual” in its fiscal third quarter and fourth quarter 2009, such that the remaining balance of the “bump-crack accrual” (defect) was US$145.7 million at the end of its fiscal fourth quarter, according to Nvidia.
Nvidia is also negotiating with insurance companies over payments to PC makers regarding GPU failures, according to a report filed by TGDaily.
As early as 2007, Hewlett-Packard listed notebook models affected by the graphics chip glitch. In August 2008, Dell also listed affected models with Apple stating in October that it would repair faulty graphics chips.
In the 10-Q filing, Nvidia also stated that “in September, October and November 2008, several putative consumer class action lawsuits were filed against us, asserting various claims arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products used in notebook systems.”