“The new reporting methodology is Apple’s attempt to get investors to think of their entire business as a service (including hardware),” Munster and Thompson write. “This move should not be a surprise, given Apple’s efforts over the past four years to encourage investors to look more at its Services segment and, separately, to measure the iPhone on an annual basis rather than quarterly.”
“The change in reporting metrics lays the groundwork for an accelerated (2+ years) investor view that Apple is a services business. This is not to be confused with Apple’s Services segment,” Munster and Thompson write. “The Apple investment paradigm is moving away from a focus on device sales toward a more predictable Services-driven business that should command a higher multiple. This new paradigm has four core tenants: a stable iPhone business, Services growth, faster-than-expected capital return, and new product categories.”
Read more in the full article here.
MacDailyNews Take: Munster and Thompson predict it will “likely take a year for investors to embrace the new reporting methodology.” Hopefully it happens even faster, but we wouldn’t bet on it.
Pity the pro analysts who were repeated told by Apple to study the company’s services model and to stop relying on the unit sales crutch. Failing that, Apple simply pulled the crutch away. Walk on your own, Apple analysts!
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