“Apple reported its results for the Sept. 2018 quarter essentially in line with expectations and gave guidance for Dec. quarter revenue 2% below Street expectations,” Gene Munster and Will Thompson write for Loup Ventures. “Shares were down 5% after hours but fell further to ~7% on news that the company is adopting a new reporting methodology and will no longer break out hardware unit sales for iPhone, iPad, and Mac. ”
“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!
Investors bristle as Apple occludes iPhone unit sales data – November 2, 2018
Apple’s decision to stop reporting unit sales of iPhones, Macs, and iPads is a ‘defining moment’ – November 2, 2018
Apple to stop reporting iPhone, Mac, and iPad quarterly unit sales – November 1, 2018
Apple tumbles 7% after reporting record-breaking quarterly earnings – November 1, 2018
Apple beats Street with another record-breaking quarter – November 1, 2018