Apple’s reporting changes strive to shift the focus to the company’s massive profits

“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!
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