There's a little joke at the end of Charlie Sorrell's nicely illustrated 8 Things to Expect in the Next iPhone Update on Wired.com.

The last item in Sorrell's list of known fixes (cobbled together from leaks from iPhone Firmware 2.2 Beta 2) is improvement No. 8:

Copy and Paste

Kidding! You didn't fall for that one, did you?

The irony of Sorrell's joke is not just that the one fix users have been asking Apple (AAPL) to make since Day 1 hasn't been addressed. It's that none of these improvements top anyone's wish list.

Here's an eye-opening exercise: Compare Sorrell's iPhone 2.2 feature list to the first eight items (of hundreds) in the user-generated wish list being assembled at Please Fix the iPhone, which began soliciting suggestions 12 days ago and has already generated more than 270,000 responses:

Note that not one of the iPhone's new features appears on the user-generated list. In fact, you have scroll down to No. 18 — "Walking directions," a new Google Maps feature — to find anything that matches.

A publicist for FullSix, the "relationship marketing" agency that created Please Fix the iPhone, talks about a growing trend in which companies use customer feedback to drive product development — citing as examples My Starbucks (SBUX) Idea and Dell's (DELL) Idea Storm.

Steve Jobs prides himself in taking the opposite approach. He believes customers don't really know what they want until they see it. "I skate to where the puck is going to be," he says, quoting Wayne Gretzky. "Not to where it's been."

But you can wear Steve Jobs down. "We heard you," he'll say at a keynote, when he introduces a fix that users have been clamoring for.

If you have improvements you'd like to see in future iPhone firmware updates, it's not too late to add your vote — or your ideas — to Please Fix the iPhone here.

Here's a headache most companies would love to have.

Apple is sitting on a huge cash reserve — $24.5 billion as of September and growing at the rate of $8 to $10 billion a year –  that's doing almost nothing for it.

The money is earning about $1.55% interest after taxes, according to a report issued Wednesday by Bernstein Research's Toni Sacconaghi, at a time when the company's stock is trading at a unusually low (for Apple) multiple of 15 times earnings.

That makes conditions ideal for a massive buyback of Apple (AAPL) shares, says Sacconaghi.

"Mathematically," he wrote "share buybacks boost EPS only if a stock's P/E multiple is lower than the reciprocal of the after-tax interest rate earned on cash."

Apple has been trading at 30 to 40 times earnings in recent years, which Sacconaghi believes is one reason Apple has not initiated a stock repurchase program in the past 5 years.

But today, according to Sacconaghi's model, Apple is trading at about 18 times his fiscal year 2009 earnings estimate (and about 13 times earnings using non-GAAP numbers). By his formula

18 < 1/.0155 < 64.5

Sacconaghi goes on to calculate what a buyback would do to Apple's share price. Ten billion dollars spent purchasing Apple share, he estimates, would boost the company's (GAAP) EPS about 4%. A $20 billion buyback program would boost it about 9%. And if the $20 billion program were front-loaded — completed in the first fiscal quarter of 2009 — the company's EPS could jump as much as 15% (or $0.75 a share).

Heady stuff for shareholders. And, according to Sacconaghi, better than the alternatives: making a major acquisition, paying a substantial dividend or continuing to let its cash hoard grow — which might make it a tempting target for corporate raiders who see the cash as a way to pay for a hostile takeover.

A big dividend — say, 5% — would consume only about half Apple's cash flow, and a special dividend would dilute Apple's earnings growth too much to please shareholders.

A major acquisition is another possibility, but it would be out of character for Apple. The company usually buys small shops that it can bend to its will, and there aren't many big ones out there that can keep up with Apple's blistering pace of innovation.

Of course, Steve Jobs may have better ideas than Toni Sacconaghi about what $25 billion can do. The last time Apple's stock fell this sharply — plunging from nearly $40 a share in March 2000 to $7.44 in December 2000 –  Jobs used the cash he had on hand to start a chain of Apple Stores.

[Chart courtesy of Bernstein Research.]

The Linux version of the HP Mini 1000 will sell for $379 when it arrives in January. While the laptop itself won't sink Microsoft, it's one more example of how powerful PC companies are relying less on Windows, and doing more software themselves. Image: HP

In January, Hewlett-Packard will introduce a glossy black mini-laptop at retail for a mere $379. When it does, it will become the first major computer maker this decade (besides Apple, of course) to push a non-Windows PC in stores.

This Linux-based version of the HP Mini 1000 will not slay Microsoft (MSFT) Windows. But it will add to a growing sense that the iconic operating system's best days are behind it.

Since we first began to fall in love with the personal computer — before we met YouTube and Google (GOOG), cable and DSL – Microsoft Windows has pretty much run the show. We've become so accustomed to our Microsoft-controlled existence that jokes about the Start menu and the Blue Screen of Death have become part of our national conversation. That's the genius of Apple's (AAPL) hilariously mean Mac vs. PC commercials; as viewers, we connect with the message about the portly PC guy because we feel like we know him. In a way, we do — we've lived with him in the den or the home office for decades now. More

Despite the downturn, AMD is hopeful that it can sell its higher-performance server chips; and the early reviews are positive. Image: AMD

Sun Microsystems sells a lot of servers to the financial services industry, which has been hard-hit by the credit crunch. So when Sun CEO Jonathan Schwartz recently asked a banking executive how he was doing, he probably wasn't surprised at the response: "I'm curled up in the fetal position."

Investors can relate. Last week Sun (JAVA) warned that it would report a huge loss for the summer quarter, news that sent shares skidding 17%. But despite the doom and gloom, Sun expects to keep getting server orders from banks and other customers. After all, with all those Wall Street traders dumping stocks, somebody's still got to process the transactions. And that's part of the reason why Advanced Micro Devices (AMD) is optimistic that its new server chip, code-named Shanghai, will do well despite the downturn. More

Bullish Cross' Andy Zaky has been on a tear lately.

The blogger-analyst, whose predictions of Apple's (AAPL) quarterly earnings bested the pros for the second time this year (see here and here), is using the new adjusted revenue numbers Steve Jobs released last week to take a fresh look at every aspect of company's business.

Today he's looking at the iPod — the MP3 player that was once the main driver of Apple's growth, and which contributed more than 55% to its total sales revenue as recently as the first quarter of fiscal 2006.

But the days that Apple was driven by the iPod are over, he concludes in an article posted Sunday evening. When viewed using so-called non-GAAP* revenue numbers (i.e., including the revenue from iPhone sales that Apple has been hiding in subscription-based accounting), the iPod's contribution to Apple's quarterly sales has shrunk from 55.6% in 2006 to 14.2% last quarter, as shown in Zaky's chart below:

One consequence of the iPod's diminishing role in Apple's business model is a lessening of the company's dependence on its first fiscal quarter — the one that includes revenue from the millions of iPods purchased as Christmas gifts. Notice in the following Zaky chart how the spike represented by Q1 sales in each of the last three years has been replaced by a spike in Q4 — the September quarter in which Apple released its iPhone revenue bomb.

*GAAP = Generally accepted accounting principles, by which Apple spread the revenue from iPhone and Apple TV sales over the life of the product rather than reporting it in the month the device was sold.

Here's a chart that should keep Steve Ballmer up at night.

It compares Microsoft's (MSFT) market share, revenue, net profit and growth rate to Apple's (AAPL), using the numbers from each company's most recent quarterly report.

Although Apple has a bit more cash on hand ($24.5 billion v. $20.7 billion), Microsoft's operating system still dominates. And if you use generally accepted accounting principles (GAAP), Redmond's revenue and net income still dwarf Cupertino's.

But it turns out that Apple has been hiding most of its iPhone revenue behind subscription-based accounting (see here). As Apple Insider's Prince McLean points out, if you use the non-GAAP deferred revenue numbers that Apple released last week (and are shown in this chart), the company now earns more than half of Microsoft's profits on more than three fourths of its revenue (see Apple earnings, profits, and cash embarrass Microsoft).

Steve Jobs' company is also growing much more quickly than Ballmer's. Microsoft's revenue grew 9% year over year last quarter. Apple's grew 75%.

The tech-heavy Nasdaq has cratered in recent weeks, but some companies have less to fear than others.

It would seem we've got all the makings of a tech shipwreck.

In the past few days, Xerox (XRX), Yahoo (YHOO) and eBay (EBAY) each announced plans to cut thousands of jobs. Esteemed Silicon Valley VC firm Sequoia Capital is warning entrepreneurs that it's time to batten down the hatches because the good times are over. Startups Adbrite, imeem, Seesmic and Zivity are each laying off at least a quarter of their employees. We've been here before, and it looks ugly.

Or does it? Listen to execs at some high-flying companies on the other hand, and you get a somewhat different outlook. Apple (AAPL) CEO Steve Jobs this week told investors he plans no job cuts, and he's "not tremendously worried" about Apple's outlook. Intel (INTC) CEO Paul Otellini said he expects technology "will probably do well" in this downturn. Software and services heavyweight IBM (IBM) went out of its way to reassure investors earlier this month, pre-announcing its third quarter earnings and promising to keep its financial promises for the fourth quarter.

So which is it? Is tech falling apart or not? More

Some Apple watchers have complained almost since the launch of the iPhone that Wall Street doesn't understand the device's value to the company. Analysts consistently underestimate Apple's revenue, these investors insist, because they fail to fully account for iPhone sales.

The problem has been festering for so long — and the gap has grown so large between Apple's actual earnings and the Street's grasp of those earnings — that Apple finally let the cat out of the bag Tuesday during its quarterly earnings call.

Measured by so-called generally accepted accounting principles (GAAP), the company earned $1.26 a share in 2008 Q4 on revenue of $7.9 billion. This is the form in which Apple (AAPL) has always reported its income.

But on Tuesday, for the first time, the company went one step further. CFO Peter Oppenheimer told analysts that when measured by actual revenue — counting the full value of every iPhone and Apple TV sold in the quarter — the company earned a good deal more: $2.69 per share on sales of $11.68 billion (see transcript here).

The consensus among analysts before the earnings call was that Apple's revenue for the quarter would be about $8.05 billion. Some traders looked at $7.9 billion and thought Apple had fallen short of the Street's target by $150 million. The smart ones looked at $11.682 billion and realized they'd underestimated Apple's earnings by nearly $3.8 billion. They're probably the reason Apple's share price jumped 12% in after hours trading.

How could the analysts have been so wrong?

In the analysts' defense, the accounting methods Apple uses aren't easy to follow — even though Oppenheimer has spelled them out at almost every earnings call.

For reasons that have to do with being able to provide free upgrades over the life of the phone, Apple doesn't book the full value of, say, a $199 iPhone the day it's sold. Rather, its accountants spread that income out over 24 months, booking $8.29 in the first month, $8.29 the second month, and so on until the revenue from that iPhone has been fully accounted for. (Actually, the value of that iPhone is probably closer to $500, once AT&T has paid its share, but you get the idea.)

Given that Apple's iPhone sales have been growing exponentially over the past 15 months and that each month's iPhone revenue includes not just a share of the sales from that month, but a share of iPhone sales from each of the months that preceded it, you begin to see the dimensions of what one might call Apple's iPhone revenue bomb.

"This is a pretty big deal," Steve Jobs told analysts and journalists on Tuesday, as he made his first appearance at an Apple earnings call in 8 years to try to explain the iPhone's so-called subscription accounting system.

"As long as our iPhone business was small relative to our Mac and music businesses, this didn’t really matter much. But this past quarter, as you heard, our iPhone business has grown to about $4.6 billion, or 39% of Apple's total business, clearly too big for Apple management or investors to ignore."

Oppenheimer and Jobs promised to provide adjusted revenue numbers — so-called non-GAAP revenue — every quarter going forward. But they didn't provide any non-GAAP numbers from quarters past, making it difficult to gauge how fast Apple is actually growing.

That's where Andy Zaky comes in. An amateur Apple watcher — and one of the blogger-analysts who humiliated the professionals in a Q4 earnings estimate smackdown earlier this week (see here) — Zaky stayed up all night Wednesday trying to reconstruct Apple's actual earnings in quarters for which it didn't provide non-GAAP data.

His results, published early Thursday on his blog Bullish Cross, and republished by AppleInsider and Seeking Alpha, show that Apple's revenue actually grew 75% year-to-year last quarter, not the 27% that the company reported, while its real net income grew nearly 125%. The pros could learn a lot by studying his findings.

Zaky's results are summarized in the chart below. To see how he arrived at his numbers, click here.

Here's an interesting corporate milestone: When the markets closed on Wednesday, Dell (DELL) was trading at $11.98 share, with 1.96 billion shares outstanding. That puts Dell's market capitalization at $23.5 billion.

Meanwhile on Tuesday, Steve Jobs reported that Apple (AAPL) ended fiscal year 2008 with $24.5 billion in the bank.

In other words, Apple could buy Dell with the cash it has on hand and still have more than $1 billion left over. (Or rather $10 billion, if you count, as reader Joe Goodart does, the $9 billion Dell has in the bank.)

Hard to believe that it's been only 11 years since Michael Dell, asked what he would do if he were Apple's CEO, answered:

"What would I do? I'd shut it down and give the money back to the shareholders." (link)

For the record, Apple's market cap today stands at $85.8 billion.

Don't cry for Michael Dell, however. According to a list of the 400 wealthiest Americans published last month, his net worth is still more than three times Steve Jobs’.

• Michael Dell: $17.3 billion
• Steve Jobs: $5.7 billion

For a timeline of other Apple v. Dell milestones, see MacDailyNews here.

Click above for video about Apple's holiday challenge — and why success hinges on laptops.

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