Apple's gap is closing quickly
The opportunity to cash in on the iPhone's subscription accounting has mostly passed
Source: Deagol's AAPL Model
Apple (AAPL) is scheduled to report its fiscal 2009 earnings next Monday, Oct. 19, and in the days ahead investors can expect to hear a lot about the new accounting rules that will allow Apple for the first time to book iPhone revenue when the sales occur, rather than spreading it out over eight quarters.
The effect of the old rules was to create a gap between Apple's actual revenue and its GAAP revenue (for generally accepted accounting principles) — the number the company is required by the SEC to report every quarter. This gap grew wider as iPhone sales accelerated, pouring billions into the company's coffers that weren't reflected in its earnings per share.
Many investors and analysts were well aware of this phenomenon. But many weren't, and the company's share price whipsawed dramatically as the stock fell in and out of favor over the past two years. The latest pop came three and half weeks ago when CNBC's Jim Cramer, anticipating that the new rules would boost Apple's EPS, told his Mad Money audience to go "all Jimmy Appleseed."
But Cramer's advice may have come too late, according to the chart posted above (and reproduced full size below the fold).
