Apple announced their first quarter earnings for fiscal year 2010 Monday, and the real news wasn’t their record revenue but their adoption of the new Financial Accounting Standards Board’s rules regarding so-called “subscription” products. Previously, a portion of the revenue from the iPhone and Apple TV had to be recognized over a period of two years. With the new standards in place, Apple may now recognize revenue from these products at the time of sale.
The shift in accounting standards simplifies Apple’s quarterly statements, which until now reported revenue from subscription products in two ways—either all up front or spread out over two years. Furthermore, the company has revised its earning statements all the way back to 2007 when the iPhone first hit the market.
Many analysts failed to adjust for the new FASB rules, and their predictions fell well below Apple’s actual performance as a result. The Street predicted $14.69 billion in revenue with earnings per share at $3.49, well short of the $15.68 billion in revenue and $3.67 EPS Apple reported.