Apple's 2009 earnings up nearly 44% under new accounting rules – analyst

I guess there is just no teaching stupid other than to say; Yes,we did go to the moon in 69. Yes, your mother did drop you when you were young. And no, that is not your father

Wow, such investor excitement! I can see how this ruling is kicking the share price into overdrive!!

Uhh, eventually.

@Dave, as others have noted, your conclusion that this has anything to do with AT&T's subsidy is nonsense. They were deferring revenue before the subsidy when the iPhone launched. Remember when the phone was $500 and $600? Yes, that was pre-subsidy and Apple was deferring revenue.

If AT&T were to negotiate a contract without subsidy, then the price to the consumer would reflect the true retail price, just as it did originally.

And, your hypothetical, doesn't allow for unit sales growth nor bill of goods to go down.

@RK, This will not lower LT earnings. That's nonsense. As Apple added deferred revenues, or subscription accounting, the net result is a smoothing of earnings; however, in the transitional period of the first few years, GAAP will be catching up to non-GAAP. They would eventually be very close to each other.

Why this has affected Apple, is because it's incredibly rare for a company to have added a new product line that requires subscription accounting that is such a large proportion of their revenue and earnings.

PED, I'm not sure why you need to credit Kaufman Bros for a data table, that comes straight from Apple's earnings press release. Kaufman, itself, cites its source as Apple data, and adds in the word "estimates". The only estimate seems to be taxes, but that could have been gleaned by looking at the full 10Q.

ex ped: True, but without credit it might have seemed as if I were trying to pass if off as my work

Sacto Joe, Danny Pittsburgh, San Mateo guy, Billy Boston – where is everybody? I know you didn't like hearing it when I was saying it but did you short AAPL yesterday at 188 like I told you last week? You'd have made 5 pts. already…and there's more to come. But take your quick trade off the table if you don't like jilting Stevie Jobs. Just remember though. He'd do it to you in a Silicon second. By the way, looks like the GAAP change is already baked into the cake so the slow pull of sales to other (less worthy) devices and gradual contracting of margins for AAPL will commence next quarter. So, if you can find the evil within yourself to make money on the mighty AAPL then by all means keep your shorts on (pun intended) until year end when AAPL is below 160. At that time, I'll let you know what's what. In the meantime, can anyone tell the Giants how to score inside the Red Zone? It's really getting annoying now.

How is GAAP vs. non-GAAP going to change AT&T's willingness to pay Apple a subsidy. You are WRONG. Check your facts or skewed logic.

The new reporting rules just past by the FASB will be GAAP. It is simply what is called a "change in accounting principle" in the accounting industry and will be footnoted in the financials of all the entities that change their way of accounting for these items. And to Davw in Boston, check your facts. The primary driver in Apples revenue bump with the accounting change is in fact the treatment of the "per phone" subsidy received from AT&T.

@Dave, Akron Ohio
"Eventually that subsidy will either be reduced or go away when the contract is renegotiated."
There is no connection with AT&T subsidy and Apple's earnings whether they are GAAP or non-GAAP. There may be a connection if Apple uses Verizon or other telecoms. I believe that your comment is WRONG.

Well, if Gene Munster says it, then it must be true!

It will give a short term boost to the earnings however it will also lower the long term earnings. Another effect will be the volatility in the long run as at present revenue from subscriptions get smoothed out evenly over eight quarters.

Since Apple's past reporting was GAAP, will it's new reporting format (non GAAP in the past) be called GAAP or Non GAAP ?

Apple is obviously the primarily beneficiary of this change in accounting rules. And the main cause is their incredible fortune at getting AT&T to pay them an incredible subsidy. And the change does support an increase in market value. But does it support the market price in the long term. Eventually that subsidy will either be reduced or go away when the contract is renegotiated. At that time quarterly revenues decrease and the bottom line begins to stagnate. I wonder if at that point in time someone might be wishing they had kept the subscription accounting to help prop up the revenue numbers?

I think PED hasn't mixed up the the GAAP vs non-GAAP. Apple has been reporting unofficial non-GAAP results in addition to GAAP results to better give color on real sales and revenue. The article is saying going forward the official reported revenue will be closer to the non-GAAP results that had also been reported.

Wow – with awesome Apps on the iTunes store like iZinger and MadLipz it's no wonder that Apple profit is soaring!

You've got a mixup in you article:

"the new generally accepted accounting principles (GAAP) won't be exactly the same as the non-GAAP earnings it's been reporting for the past year "

The current generally accepted accounting principles until the ruling have been GAAP NOT non- GAAP

ex ped: Apple has been reporting GAAP earnings all along. They started reporting non-GAAP earnings, alongside the GAAP earnings, starting last year. Will edit the post to clarify.