Apple axing of device sales data sparks fear of top iPhone
Apple, the world's largest company's target for leaks and rumors, has failed to produce any real surprises in product launch for many years.
But when Apple executives dropped "one thing to thing" on Thursday, investors and analysts became anesthetized.
Its trick was not to introduce a product to the world, but to make something disappear. The world's most valuable company will no longer tell investors and analysts how many iPhones, iPads or Macs it sells.
For most of a decade, few figures have had the opportunity to move billions of dollars of investors money as fast as the number of iPhones Apple sold in a quarter.
But Finance Director Luca Maestri insisted on Thursday that a "sales unit is less relevant today than it was in the past." Because the company sends such a wide range of iPhone and iPad models at several different prices, shareholders should focus on revenue and profit margins, he said.
Apple will now provide dollar revenue and sales prices for each device category every quarter, instead of specifying the number of units sent to the nearest thousand.
Investors do not seem convinced. The move helped dry as much as $ 70 billion from the company's market capitalization, and dipped cards below the $ 1tn mark that surrendered in August. Shares fell by almost 7 percent in post-trade.
"It's obvious to ask if Apple can ever return to the number of devices it sold in 2015," said Walt Piecyk, telecoms analyst at BTIG Research, pointing to Apple's lower-expected guidance for the fourth quarter. "Units have not been relevant for three years. The stock seems to be doing well when they reported these figures. "
" There will be a lot of pushback about not giving iPhone device data, "says analyst at Citi, Jim Suva, to Maestri on Thursday's earnings call. "Some people may fear that this means that iPhone devices will start to go negative the following year. It's easier to talk about good things and not talk about things that are not so good."
Maestri responded: "I can assure tell us that it's our goal to increase unit sales for each product category we have. "
But Wayne Lam, IHS Markit analyst, suggested that may be a "half truth".
"This is a market that has peaked," he said, referring to smartphones in general. Apple has only managed to maintain its growth by raising prices, first with $ 1000 iPhone X and again in September with $ 1100 iPhone XS Max.
Thursday's figures pointed to the success of this strategy, as the average sales price of an iPhone increased from $ 618 a year ago to $ 793 in the three months to September. Apple's iPhone sales dropped 29 percent, although unit numbers were flat compared to the same period a year ago.
"They set the entry price higher and higher – and consumers follow them," said Lam. "[Customers] really does not have an alternative to this quality of the ecosystem and user experience."
Price increases were also detected earlier this week when Apple introduced iPads and MacBook laptops that were as much as 20 percent more expensive than their predecessors.
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By removing unit numbers, analysts will no longer be able to calculate how their average sales prices have changed. Piecyk believes that the simultaneous development of increased prices and reduced financial information seems like an attempt by Apple to bury the story that it utilizes its loyal and often wealthy customers.
"It's certainly not a good look at Apple in the eyes of consumers when analysts quote ASP rising by two digits [percentage points]," he said. "Do not know device reporting effectively eliminates the discussion about rising prices from common media stories."
It also hides the answer to a key question for Apple investors: How much can customers increase their price increase tolerance?
Apple's performance in less prosperous markets can make a clue.
CEO Tim Cook on Thursday owed a handful of emerging markets, including Turkey, India, Brazil and Russia, for the weaker view of holiday sales, although he insisted that he "could not be more bullish on Apple's future." Sales in India were flat year after year while Brazil fell.
Cook staggered the downturn of "a bit of another story" in every market, but he pointed out that currency fluctuations had asked Apple to raise prices even further in the countries – and these markets do not grow we want to see. "
Apple has never broken iPhone sales in specific regions, although it sometimes indicates the growth rate in markets where the products sell well. The defense of the reduced transparency pointed out to Maestri that Apple's competitors like Google or Samsung already give far less details about their sales. [19659002] While most Wall Street analysts regret that Apple had just made their job much harder, some were supportive.
"No device sales data on Apple products is long," said analyst Horace Dediu from Asymco. "The information is too important to share. It signals to competitors and the fixed analysts on incorrect measurements. What you measure determines what you see. And what you do not see. "
Investor's obsession with iPhone sales has frustrated Apple's efforts in recent years to mark its Services business, which brought about $ 10 billion in revenue during the quarter. Cook said that Apple's hidden value is in the size of its customer base and their repeated purchases through the App Store, iCloud or Apple Music.
"Our installed base grows with two digits," he said. "It's probably a much more important metric for us from an ecosystem point of view."
He commits however, does not reveal the calculation every quarter.
