“For all of its terrific marketing, superb products and highflying stock, there’s another side to the revival of Apple Computer that gets less airplay: Its lack of a certain type of disclosure.,” Herb Greenberg reports for MarketWatch. “With the exception of analyst Robert Renck, nobody seems to care. Renck, of the private research firm R. L. Renck & Co., may be the only analyst to rate Apple a ‘sell.’ Among the reasons: the sparse way in which it breaks out operating results of its segments. Renck, who prides himself on knowing his way around the dark alleys of financial statements, has a knack for questioning the status quo of Wall Street darlings. His earlier targets include McDonald’s, before investors realized how stale it had become, and CUC International, before it was acquired by – and became a major headache for – Cendant.”
Greenberg reports, “While not predicting a similar fate for Apple, Renck believes the company’s skimpy segment disclosure makes it a ‘have-faith, trust me’ stock. As a result, he has warned his clients, Wall Street’s bullish forecasts aren’t without risk for this simple reason: Analysts can’t get a true and complete picture of how Apple makes its money. ‘I don’t think Apple is doing anything wrong other than their penchant for secrecy,’ he says.”
“Renck goes so far as to say he believes Apple should do a separate breakout for computers, iPods, music-related products, peripherals and software and service. ‘Their business has changed and they should be doing it differently,’ he says. ‘Transparency is what everyone wants, and they don’t want to be transparent,'” Greenberg reports.
Greenberg reports, “On a recent earnings conference call, several analysts specifically asked about the iPod’s gross margin. Finance Chief Peter Oppenheimer responded to one, saying, ‘… Our competitors would just love to know what our specific gross margins are … and we just don’t want to help them.’ While that is understandable, Renck doesn’t believe it is necessarily right. ‘Without clarity,’ he argues, ‘analysts can’t forecast with any degree, other than to rely on what management says.'”
Full article here.
[Thanks to MacDailyNews Reader “Jim” for the heads up.]
MacDailyNews Take: So, Apple should risk hurting themselves by disclosing information that their competitors could use in order to appease the Wall Street charlatans, er… analysts? Because Apple has a responsibility to shareholders, if it’s legal, the company should do what they can to be as competitive as possible. What’s really crazier, Apple not breaking out separate products in product categories or rating AAPL stock a “sell” for no sound financial reason?
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