Apples' earning reports indicate that Steve Jobs isn't going to go broke any time soon. But it's what's inbetween the lines that's most interesting. Alex Kidman dons his financial cap once again.

Apple today held a very boring event -- its fourth quarter financial reports, to be exact. Boring in the sense that they didn't announce any new products, just the bucketloads of money they'd made out of existing ones. While Apple fans might be rejoicing at the company's US$7.9 Billion revenue and US$1.14 Billion profit -- I for one have never quite seen the sense in applauding a company for making money unless you do happen to be a shareholder, but there you go -- it's some of the finer details that make for the really interesting reading.

First, on the computer front. Bear in mind that Apple doesn't call itself "Apple Computer" any more -- it's just "Apple". Still, they do sell computers, and quite a few of them. The report indicates some 2,611,000 Macs shipped in the fourth quarter (although "shipped" is different to "sold", unless the shelves of every Mac retailer worldwide are suddenly bare, and nobody told me), and 11,052,000 iPods sold.

That's pretty impressive there, given how long in the tooth the iPod brand is -- an eight percent growth from the same time last year. You've got to wonder at what point the iPod will stop being a must-have accessory for people, as eight percent growth doesn't entirely point to an economy purely of people replacing broken iPods.

The iPhone results were, unsurprisingly, rather more impressive than the same time last year, with 6,892,000 sold, compared to 1,119,000 last year. It probably helps to launch the thing in more than one country when you're seeking to flog phones, but it didn't stop Steve Jobs from quipping that they sold more phones than RIM, makers of the Blackberry.

What's more interesting about the iPhone in the earnings report, however, lies in some financial administrivia, namely how long Apple expects to earn money from each iPhone.

Now, I'm not an economist, and what I know about US accounting rules can be written on the back of a chip packet. I feel that's important to note here, as the intricacies escape me. However, under GAAP (not a clothing brand, but the very ordinarily named "Generally Accepted Accounting Principles"), Apple has to declare the revenue for its Apple TV and iPhone products "on a straight-line basis" (whatever that means) "with any loss recognized at the time of sale.".

Tellingly, Apple didn't break out iPhone actual revenue in the report, probably because (if I'm reading that right) they'd then have to reveal the initial loss made on the phones. The non-GAAP figures quoted back this assumption up; without "the impact of subscription accounting" (Apple's words), revenue would have been US11.68 Billion and profit US$2.44 Billion. That's US$3.78 Billion in difference if you don't have a calculator handy.

In any case, even with that Apple's still got US$25 Billion in the bank and no debt, so I don't think we'll be seeing Steve Jobs in any Windows Vista ads any time soon. What I did find interesting under the GAAP notices was that the company is required to provide an estimate as to the "economic life" of its Apple TV and iPhone products, on the basis that they might (let's face it, they will) introduce new revenue generating features in "the future". Or "the next time you visit the iTunes Store", as I like to think of it.

In any case, the estimated economic life of that shiny iPhone 3G next to you? 24 months, as far as Apple's concerned. Naturally, this does tie into the general contract length in the US, but it's also an interesting statement of fact; while most of us hope that our electronic gadgets and gizmos will last as long as possible, accounting rules mean that Apple's got to provide more than an educated guess.

I'm just left pondering... is 24 months the length of time before all the blue smoke escapes and your iPhone 3G stops working? The amount of time before you lose interest and buy something else? The amount of time before Apple figures they will have released another iPhone with enough tempting features to tempt you away from the by-then-ancient-technology of the iPhone 3G?

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