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Goldman Sachs, the Apple Card's partner bank, expects that a misunderstanding predicted by investors and analysts has hit AAPL head-on.
According to him, the disadvantage of the title should reach 26%, because he thinks that the market will react to an accounting decision made by the company Cupertino …
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When you buy an iPhone from Apple, the company does not consider all these revenues as hardware. Since Apple offers free services to its customers, such as the superb 5GB of iCloud, Siri and Apple Maps storage, it allocates a portion of revenue to Services.
Apple would have the same approach with the free Apple TV + one year service that you receive with a hardware purchase, declares CNBC, quoting an investor's note.
"We believe that Apple is considering counting its one-year trial for TV + in the form of a reduction of about $ 60 on a combined set of equipment and services," he said. says Rod Hall, Goldman analyst.
"Indeed, Apple's accounting method transfers revenue from hardware to services, even if customers do not perceive themselves as paying for TV +. While this may seem convenient for Apple's service revenue line, it is just as embarrassing for apparent hardware ASPs as for margins in periods of high sales, such as FQ1'20 next December. " Hall added.
In other words, he thinks that investors will just look at the margin of the title on the material, see a decline in apparent Average sales price and think that hardware margins are down.
Hall has provided a somewhat complicated calculation that produces an apparent 7% reduction in ASP and which he says will lead to the success of the AAPL.
Here's an example of how Hall expects Apple's accounting to work in this case. You're buying a new iPhone 11 Pro at $ 1,000 (Hall rounds the price up to $ 999 for easy example). The purchase is accounted for by Apple because you get an iPhone 11 Pro and a TV + year, valued at $ 1,060. But the $ 60 reduction for TV + "does not depend solely on TV + revenues," said Hall, and Apple instead prorated the reduction between the two.
Hall estimates that the combined discount is 5.7%, or $ 60 divided by $ 1,060. Applied to the package, the iPhone is discounted at 943.40 USD (or 94.3% of 1,000 USD) and the annual price of TV + is discounted at 56,60 USD (or 94.3% of 60 USD) ). As a result, and assuming that the iPhone is not purchased with a installment payment, Hall found that although the iPhone has a lower average price, it also generates a lower profit for Apple because the cost products is not affected by the company discount. . However, at the same time, Hall expects discounted TV + revenues to be credited as "deferred revenue" and then "accrued monthly over a 12-month trial period". he declared.
"We calculate a negative impact of about 7% on FQ1 and FY20. [average selling prices] because of this accounting treatment, "Hall said.
There is therefore no real change in the margin, but the accounting method improves the appearance of services and that of the iPhone.
Photo: Shutterstock
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