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Despite the launch of the iPhone 11 range, new iPads and other hardware, Apple is adopting more and more services to attract customers. Apple TV + is one of the most recent companies in this field. Goldman Sachs, a company that supports the Apple Card credit card, warned that the streaming video service could have a negative impact on Apple's profits.
Apple, however, disputes this. The company rejects Goldman Sachs' analysis, marking an interesting turning point in the relationship between Apple and its customer.
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Rod Hall, an analyst at Goldman Sachs, criticized Apple in a research note. He added that Apple TV + would likely have a "significant negative impact" on the company's results. He criticized Apple's accounting methods and warned of a decline in gross margins and profits, as well as its impact on average selling prices and earnings per share.
Reuters reported that "at the beginning of its fiscal year, Apple changed to account for the value and costs of free services – like Apple Maps – and transferred it into its service segment," and declared:
In his note, Goldman's Hall said that Apple would likely treat subscriptions to TV + in the same way, counting it as a set of discounted free services associated with a hardware purchase. According to Hall, this would mean lower average selling prices for iPhones and other Apple devices, but faster growth in the company's service segment.
Apple responded by telling Reuters:
We do not expect that the introduction of Apple TV +, including the accounting treatment of the service, will have a significant impact on our financial results.
As Reuters notes, the dispute between Apple and Goldman Sachs is a rare public discord between two companies working together.
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