Apple will no longer report quarterly unit sales of Mac, iPads, and especially iPhones. The change gave investors jitters on Friday.
For as long as anyone can remember, every three months, Apple has told the world how many iPhone, iPads and Mac computers it has sold. It’s been one of the standards the company has used to show how popular its products are remain.
But from here on out, Apple will be keeping those numbers to itself. And on Friday, Apple’s investors weren’t too happy about the company’s decision.
Apple shares fell nearly 7 percent, to $206.80, as Wall Street sussed out the company’s announcement that beginning with its December business quarter, it would no longer give updates on the number of iPhones, iPads and Macs it sells each quarter. Apple made the disclosure during a Thursday conference call to discuss its fiscal fourth-quarter results.
Apple Chief Financial Officer Luca Maestri said the company’s decision to change that aspect of its reporting structure was based on the company facing new realities with its major business lines.
“A unit of sale is less relevant for us today than it was in the past, given our breadth of our portfolio and the wider sales price dispersion within any given product line,” Maestri said during a conference call in which he was joined by Apple Chief Executive Tim Cook.
Apple’s decision, along with the company giving a disappointing sales forecast for its fiscal first quarter, combined to weigh on investor sentiment Friday. Apple said it expects revenue for the three months of October, November and December to be between $89 billion and $93 billion. That outlook, which potentially falls below analysts’ forecasts of $93 billion, was seen as especially concerning due to the fact that the final quarter of every year is always Apple’s busiest business period.
Dan Ives, an analyst with Wedbush Securities, called Apple’s decision to no longer give iPhone sales numbers “a tough pill to swallow.
The transparency of the Cupertino story takes a major dent given that tracking iPhone units has become habitual to any investor that has closely followed the Apple story for the last decade plus,” Ives said.
The move toward no longer reporting unit sales of the iPhone, in particular, was viewed by many Apple analysts as evidence that the company knows that while sales of iPhones are flattening out, and may decline, Apple believes it can make up for such a scenario with higher average selling prices (ASPs).
Evidence of that could be seen in Apple’s fourth-quarter results. The company reported it sold 46.89 million iPhones during the quarter, which was just 0.5 percent higher than the 46.68 million iPhones during the same period a year ago.
However, revenue from iPhone sales reached $37.19 billion, a 29 percent gain from last year’s sales of $28.85 billion. Apple’s fourth quarter this year included two months of sales of the new iPhone XS, which starts at $999, and the iPhone XS Max, and its $1,099 initial price tag. Based on Apple’s revenue and unit sales, the average price of iPhones sold during the fourth quarter was $793.
“While it’s frustrating how Apple, with no warning, decided to pull the plug on unit metrics, our core bull thesis does not change on the story and to some extent is emboldened by the (approximately) $800 ASP story and a robust services business poised to hit $50 billion-plus in (Apple’s) 2020 fiscal year,” Ives said.
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“Some investors will assume iPhone units are trending poorly,” said Michael Olson, of Piper Jaffray. “We believe Apple is simply trying to change the focus towards the overall installed base and services revenue per user.”
