By Philip Elmer-DeWitt
October 28, 2012

FORTUNE — Ever since Thursday, when Apple (AAPL) confounded Wall Street’s consensus by beating on revenue ($36 billion vs. $35.8 billion) and missing on earnings ($8.67 vs. $8.75), analysts have been scratching their heads trying to understand what happened.

Most analysts focused on the shortfall of iPad sales — an explanation that loses some of its persuasive punch when you look at last quarter’s iPad sell-through. (See Did iPad unit sales grow by 26% or 44% last quarter?)

Now Faizal Kara, a consultant pharmacist based in Toronto and a member of the Braeburn Group of independent analysts, has hit on what strikes me a simpler explanation: The Chinese yuan.

The key, he says, is an obscure line item in the latest quarterly report known as OI&E — operating income and expenditures. In Apple’s case this is almost always a big positive number, but last quarter it was negative. See below:

Q1 2012 – $137 million
Q2 2012 – $148 million
Q3 2012 – $288 million
Q4 2012 – ($51 million)

The anomaly was addressed in Thursday’s conference call by both COO Peter Oppenheimer and Treasurer Gary Wipfler, without as Wipfler put it, “getting overly detailed.” Here’s Oppenheimer:

“OI&E was a net expense to $51 million. The interest income and investment gains were more than offset by higher-than-expected currency hedging expense. Under the accounting rules, foreign exchange fluctuations late in the quarter required us to accelerate recognition of premium expense related to Q1 and Q2 hedges.”

I don’t pretend to understand every word of that, but I know that Apple is particularly vulnerable to foreign exchange fluctuations because it has $83 billion in cash sitting in foreign accounts — more, I’d wager, than any other U.S. company.

And where is the bulk of that cash parked? My guess would be China, where most of Apple’s products are manufacturered and where business is conducted in yuan renminbi.

The yuan, as it happens, was on a tear late in the quarter. On Thursday, in fact, it hit 6.2417 yuan per dollar, its best level in 19 years. A rise like that can wreak havock with the best-laid currency hedging plans.

“Here is the interesting part,” writes Kara, getting back to the point he was trying to make. “An average of Q1, Q2, and Q3 2012 OI&E brings us to $191 million. If we were to ignore this one-time cost associated with foreign exchange hedging expenses, and apply $191 million to this quarter, Apple Q4 2012 EPS would rise to $8.87 vs. Wall Street’s expectation of $8.75.”

In other words, if it weren’t for the yuan, rather than missing the Street’s earnings consensus by 8 cents a share, Apple might have beaten it by 12 cents.

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