“Last month, Apple CFO Luca Maestri told investors the company will no longer report hardware unit sales going forward,” Adam Levy writes for The Motley Fool. “This may have been a long time coming for Apple. Management has been pushing investors to focus on its growing services business, which generated over $37 billion in revenue for the company last year. That makes it the company’s second-biggest segment after iPhone.”
“Giving investors more information about services and the metrics driving services revenue may finally shift the focus from how many iPhones Apple sold in the last 90 days to how strong its ecosystem is,” Levy writes. “Apple will report cost of sales for each of its reporting segments including services. This will be the first time investors get a glimpse at services gross margin, and Maestri said, ‘We believe it is an important metric for our investors to follow.’ Apple’s services gross margin is likely well over 50%; analysts’ consensus estimate is 56%. That number is probably trending upwards, otherwise it’s unlikely the company would’ve chosen to report it.”
“Management knows its decision to stop reporting unit sales didn’t go over so well, so it might try to make it up to investors with additional details while not committing to regularly reporting those numbers,” Levy writes. “Apple’s main goal with its decision to stop reporting unit sales and start reporting gross margin on its segments is to shift the focus to profits. If it can do that, it won’t have to worry about the impact of a bad quarter of iPhone sales on its stock price.”
Read more in the full article here.
MacDailyNews Take: We hereby nominate “management knows its decision to stop reporting unit sales didn’t go over so well” for the understatement of the year.
As per unit sales reporting, Apple brought them into this world and Apple can take them out.
It will take time for the market to adjust. In the meantime, the good news for buyers, including Apple, is that AAPL is on sale!
SEE ALSO:
Apple enters death cross for first time in 3 years – December 21, 2018
Would I be wrong to guess this this massive downturn in Apple SP is, for the most part, analyst manipulation/tantrum, for no longer getting hardware sales numbers?
I find I very hard to believe, with the wide variety of iPhone options, that sales have decreased dramatically since last years models.
Yes, you would be wrong to think that a $84 drop in share price is the result of manipulation. Over 100 million shares have been dumped into the market in the past month. This the result of wholesale, relentless liquidation of Apple holding by institutional investors. Only a tin foil hat wearing simpleton think that this is manipulation.
Massive selling is still underway with Apple down yet another 3.5% today. We are seeing a historic drop in Apple value, that if it does not level out soon, will be unlike anything we have seen since the second Steve Job era began.
Apple is being absolutely hammered relentlessly by investors.
Of the other FAANG stocks + MSFT only Amazon has lower institutional ownership (higher percentage of stocks owned by individual investors). It is more likely individual investors are panicking than institutional investors are dumping.
Institutional ownership to date (via etrade)
FB 70.43%; AAPL 58.79; AMZN 55.47; NFLX 72.68; GOOG 77.97; MSFT 72.16
No, Apple is not being hammered by investors. It’s being hammered by traders and analysts. Investors realize Apple’s intrinsic value has not changed one iota. AAPL has not recanted its record holiday quarter projections. They are not going bankrupt. This is all just sheep/herd mentality based on nothing other than a sentiment change rather than actual financial results.
There were a few analysts who questioned Apple’s reasons for not giving unit sales numbers. They believe Apple is trying to hide a massive fall-off of iPhone sales (whether that’s the case or not). Maybe they’re right. I honestly don’t know because anything is possible. I would have been happier if Apple had changed from unit sales reporting when iPhone sales were soaring.
However, I don’t think Apple is selling 30% fewer iPhones that would drive the share price down 32%. That’s just ridiculous. It’s just that WS herd mentality. No greedy big investor wants to get caught holding an empty sack.
Tim Cook isn’t saying anything but he probably prefers WS to chop Apple’s value by a third in order to buy back more shares at a lower price. That makes good sense to me. Let’s hope that strategy works in favor of loyal shareholders. I really not worried as long as Apple is still selling a fair amount of iPhones and other products and I’m getting my dividend. I still think I’m ahead of the game as my portfolio is doing OK and all are dividend stocks.
^^^” I would have been happier if Apple had changed from unit sales reporting when iPhone sales were soaring.”
Yes, yes, yes. Cook should have either done what you say, or given investors something like 6 months notice that this change was coming.
Cook handled this change like the incompetent CEO that he is.
I gave this five stars before I read your last line. Now I want to give it two. There’s a lot Apple could do better. But to call Cook incompetent for all that he’s done right and executed is exceedingly unrealistic and disrespectful.