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When Steve Jobs took a shot at
Amazon.com
Inc.
Kindle in 2009, he pointed out the online retailer's decision not to report unit sales of its reading device as evidence that it did not sell much.
Nearly ten years later,
Apple
follows a similar path. The company announced that it would stop disclosing data on the number of iPhone, iPad and Mac devices sold, thus eliminating the performance indicators provided since the 1980s.
This change comes as the growth in the number of iPhones sold slows, as customers increasingly retain smartphones. Apple has responded by promoting software and services on all its devices and increasing the price of new gadgets.
Investors have hesitated about the change of ratio and income forecasts lower than Wall Street estimates. On Friday, the elimination of unit sales data contributed to the 6.6% drop in shares as the company lost $ 71.19 billion in market value in a single day.
"Apple's commitment to privacy now applies to the disclosure of iPhone units," writes Amit Daryanani of RBC Capital Markets in a note to investors. In an interview, he said the change meant that many shareholders now think that Apple is hiding something. "It's a monkey on the back," he said.
Mike Levin, co-founder of Consumer Intelligence Research Partners LLC, a market research firm surveying Apple customers, said the change shows Apple executives are considering their business in a way they do not want say aloud.
"When Apple was doing well, sales to the unit told a wonderful story. Now that the story is not so good, they say, "Let's change it," he said.
Mr. Jobs could agree. "Usually, if they sell a lot, you want to tell everyone," Apple's co-founder told the New York Times nine years ago, criticizing Amazon's Kindle.
Apple remains an extremely profitable company and has managed to increase its prices recently. Chief Executive Officer Tim Cook told analysts on Thursday that the change better reflects the evolution of Apple's business following its new pricing strategy. When a cashier calls a customer, the register does not indicate the number of units he buys, but only what he spends, he said.
Other companies have also changed the way they present their long-standing statistics.
In April,
General Motors
Co.
abandoned a decades-long practice of reporting monthly sales of vehicles and joined
You're here
Inc.
by making these figures quarterly.
Walmart
Inc.
and
Target
Corp
Over the past decade, comparable sales figures have been published quarterly instead of monthly to eliminate volatility.
"It's a new territory," said Peter Bible, head of risk at accounting consulting firm EisnerAmper LLP and former head of accounting at GM. "What about monthly unit sales of cars or unit sales of iPhone or iPad, are they afraid that this will not be advantageous?"
Apple's chief financial officer, Luca Maestri, who previously worked at GM, said Apple would continue to provide "qualitative feedback," noting, for example, that flagship iPhone unit sales are strong and are attracting new features.
Apple will now report gross margins separately for its hardware and services.
Gross margin yield from hardware and services will become an important indicator, "said Gene Munster, Managing Partner of Loup Ventures, an investment and research firm.
Investors will look at material margins to determine the health of iPhones. "All Apple needs to do is keep gross margins on hardware," said Munster, who believes the changes to reports are positive for investors because of the recurring revenue generated by the industry. services.
This change also forces Apple's rapidly growing service business to take center stage.
Apple uses 1.3 billion iPhones and other devices in active use and earns around $ 30 per device per year, thanks to app sales, music subscriptions and other offers, according to Morgan Stanley. The company expects services to account for approximately 60 percent of Apple's revenue gains over the next five years. In contrast, the iPhone has accounted for 86% of sales growth over the past five years, he said.
Over the past year, services grew 24% to $ 37.19 billion. Nevertheless, they accounted for only about 14% of Apple's total sales, which amounted to $ 265.6 billion in fiscal year 2018. Apple did not allocate revenue of its various services.
Cook, an operations expert, has helped Apple make a profit-generating machine by controlling equipment costs and inventories. From now on, the management of the company will depend more and more on the directors of Eddy Cue, responsible for software and Internet services, and Phil Schiller, who oversees the app store.
It may take a year or more before Cook's team shows up and more expensive devices can offset declining unit sales, said David Yoffie, a Harvard Business School professor Apple case studies. "Apple obviously wants to change the street discourse, but less transparency will reduce confidence in the short term," he said.
-Tim Higgins and Suzanne Kapner contributed to this article.
Write to Tripp Mickle at [email protected]
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