Apple rams their message home: Think ‘Apple as a Service’

“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


  1. Two analysts downgraded AAPL stock price severely. The market is thrashing shares hard with now 55 million shares being liquidated.

    Apple share holders are now paying a stiff price for Pipeline’s total and relentless incompetence.

    1. This is great news for Apple, Warren Buffet and other smart investors who have used the opportunity to buy more apple shares at 7%-8% discount.

      @ Von Tink, instead of complaining you should have bought more shares today.

    2. I’m a long term Apple investor and I paid rather an attractive price for a lot of extra AAPL this morning. My existing holdings may have slipped in value today, but they are massively more valuable than when I bought them and I have been receiving a pretty decent dividend on them each quarter for many years.

      If you look at how spectacularly AAPL has risen since Tim Cook took over the reigns you would realise that his performance has been excellent.

      This change in reporting iPhone numbers will have the effect of bringing some measure of long term stability to AAPL. The analysts obsession with quarter by quarter sales of iPhones encourages short term thinking. Tim Cook plans for the long term and is not concerned with short term issues which become insignificant over the course of a full year. Obviously analysts will continue to dream up sales figures based on their sources in the supply chain, but everybody will know that those figures will merely be guesses and only fools will be influenced by them.

  2. Apple had to get crushed sooner or later, so it comes as no shock to me. Whether it was weak guidance or telling analysts they will no longer be reporting unit sales, it doesn’t really matter. Apple stock is down and the $1T market cap is history. I’ll still be getting my sweet dividends and the drop won’t affect me until I’m ready to sell my stock years from now. At least Buffett understands Apple and that’s good enough for me. There must be some other big investors that will follow Buffett’s lead and get in while Apple is discounted in price.

  3. Buy apple at a discount? Hmmm, Let me thing about that? Ummm, NOPE. I’ll just hold the shares I have. A company that is going to hide their dropping sales and who only made a profit buy upping the price on out dated tech is a bad sign. Instead i bought Amazon at a discount, at least they have a model going forward.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.