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Subject:  The mystery that is Apple Retail Date:  12/29/2002  10:57 PM
Author:  Plato90s Number:  80530 of 205798

Apple Retail, besides a high profile venture, is also a very mysterious segment in that its account practices doesn't seem to make any real sense.

To begin with, it's necessary to understand how Apple handles its internal accounting. If you already know this, skip to the next section.

Apple runs its business in terms of geographical segments, with Retail being a separate one from Apple North America.

Apple's accounting is done in such a way that it assigns a Cost of Goods Sold [COGS] to its various business units to account for production and overhead costs. The determination of this value is used to determine the profit/loss of the unit, and doesn't have to be directly linked to any real-world logic or events. All other expenses go into Corporate and shows up as SG&A or R&D.

In practical terms, Apple's gross margins (revenue minus COGS) is determined directly by the assumptions the CFO want to use. If Fred Anderson says the COGS for the base model iMac