Yahoo Finance

What Apple just did to its investors is wrong

Brian Sozzi · Executive Editor

In This Article:

Apple execs apparently didn’t get the iMessage that when you are the most highly valued company on the planet that leading by example — in most areas — should be modus operandi.

The tech giant’s stock was pummeled by 6.6% on Friday following a mixed fiscal fourth quarter and so-so holiday quarter sales guidance. But it was the iPhone’s maker’s surprise decision to stop providing quarterly unit sales data for its various tech gadgets that arguably had the bulls more up in arms than the raw three-month performance.

“As demonstrated by our financial performance in recent years, the number of units sold in any 90-day period is not necessarily representative of the underlying strength of our business. Furthermore, a unit of sale is less relevant for us today than it was in the past, given the breadth of our portfolio and the wider sales price dispersion within any given product line,” said Apple chief financial officer Luca Maestri right at the top of a conference call with analysts.

Likely sensing some unease by the analyst community — which craves numbers to help assist in their financial models that are shipped off to eager clients — Maestri tried to pitch its decision as being in line with practices from competitors.

“As I know you’re aware, by the way, our top competitors in smartphones, in tablets, in computers, do not provide quarterly unit sales information either. But of course we understand that this is something of interest and when we believe that providing qualitative commentary on unit sales offers additional relevant information to investors, we will do so,” Maestri said.

Fair point. Then again Apple is the only company in the world to still be valued at more than $1 trillion in the wake of October’s stock market rout. That extreme confidence people have put into Apple by way of stock ownership should hold it to a higher reporting standard than rivals.

Analysts Disapprove

Obviously Wall Street didn’t take kindly to Apple’s dog and pony show on the conference call. In the Street’s eyes, Apple’s decision was a sign of a future of slowing unit sales across the board.

“The lack of transparency is disappointing, and will likely limit investor’s visibility into the company. Our view remains that units may not grow at all going forward, and while ASPs [average selling prices] are still increasing, at some point they will plateau,” wrote BMO Capital Markets analyst Tim Long.

Explained Macquarie analyst Ben Schachter, “Long time Apple watchers will clearly be disappointed by this and the assumption is that units are very likely to turn negative for the near-mid-term and that is why Apple is making the disclosure change.”

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