Apple has sour reaction to Goldman Sachs & # 39; analyst note

By Elizabeth Dilts and Stephen Nellis

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "NEW YORK (Reuters) – Apple Inc struck out by a Goldman Sachs Group Inc analyst on Friday in a relatively rare public dust-up between a blue chip Wall Street firm and its client." data-reactid = "23"> NEW YORK (Reuters) – Apple Inc hit a Goldman Sachs Group Inc analyst on Friday in a relatively rare public dust-up between a blue chip Wall Street company and its client.

Disagreement came after Goldman Sachs analyst Rod Hall criticized Apple's accounting practices for the tech giant's new TV + product, saying in a research note that it could lead to lower gross margins and profits.

response, Apple said it does not "expect the introduction of Apple TV +, including accounting for the service, to have a material impact on our financial performance."

A Goldman spokeswoman declined to comment or make the analyst available for interview. Apple also declined to comment on the Goldman relationship beyond commenting on the note.

While research departments at major Wall Street banks have Chinese walls that distinguish them from other functions, the rare public dispute is a difficult moment between the two companies. [19659007] Goldman Sachs has issued more bond issues for Apple over the past decade than any other investment bank, worth around $ 44 billion, according to financial data provider Refinitiv.

Goldman Sachs also advised Apple on mergers and acquisitions as late as two months. it subsequently led through its $ 1 billion deal to acquire the majority of Intel's smartphone modem business, according to Refinitive.

And just last month, the two worked together to launch both companies' first credit card – the Apple Card. [19659010] Each bank formally separates its equity research and investment banking divisions because of laws passed in the early 2000s that aimed to protect the independence of investment banking analysts, who often cover the same companies with different agendas.

Business customers generally respect the independence of the research department. When they don't, it gets a lot of attention.

In May last year, Tesla CEO Elon Musk refused to answer analysts' questions about the company's capital requirements, calling the questions "dull" and "not cool" during a conference call to discuss Tesla's performance. Later, he criticized several analysts directly for negative calls.

At the beginning of the fiscal year, Apple changed where it stands for the value and cost of free services – such as Apple Maps – and moved it to its service segment. Previously, this was accounted for under the individual products.

In the memo, Goldman's Hall said that Apple is likely to treat TV + subscriptions in a similar way by explaining it as a discounted package of a free service paired with a hardware purchase. Hall said it would result in Apple investors seeing lower average sales prices for iPhones and other Apple devices, but faster growth in the company's service segment.

Many Apple investors have come to focus on growth in the service segment that the global smartphone market has stagnated, with Apple shares rising this year despite a decline this year in iPhone sales over the past two quarters.

(Reporting by Elizabeth Dilts in New York and Stephen Nellis in San Francisco; Further Reporting by Greg Roumeliotis in New York; Editing by Daniel Wallis)

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