Apple decision to keep lid on iPhone sales data unnerves investors

Investors were unnerved by Apple’s decision to keep them in the dark regarding unit sales data for its iPhone, iPad and Mac computer products. (Reuters)
Updated 02 November 2018

Apple decision to keep lid on iPhone sales data unnerves investors

  • Apple will stop reporting unit sales data for its iPhone, iPad and Mac computer products, the latter of which it has given out since 1998
  • ‘Companies typically stop reporting metrics when the metrics are about to turn. This is not a good look for Apple’

SAN FRANCISCO: First Apple took away the headphone jack on its iPhones. Then it took away the home button.
And now, it has taken away a closely watched performance metric that it has disclosed to investors for 20 years.
The Cupertino, California-based company on Thursday said that it will stop reporting unit sales data for its iPhone, iPad and Mac computer products, the latter of which it has given out since 1998. Analysts and investors use the figures to calculate the average selling price of Apple’s devices and gauge the health of the company.
Apple warned that sales for the crucial holiday quarter would likely miss Wall Street expectations, which Chief Executive Tim Cook blamed on weakness in emerging markets and foreign exchange costs.
The disappointing forecast by the world’s most valuable technology company helped send shares down as much as 7 percent, taking roughly $70 billion off Apple’s market value and forcing that value below $1 trillion. The forecast could also deepen concerns for technology companies that saw a sell-off after misses by Amazon.com Inc. and Google parent Alphabet Inc.
Apple said it expects between $89 billion and $93 billion in revenue for its fiscal first quarter ending in December, with a midpoint of $91 billion coming in below Wall Street expectations of $93 billion, according to IBES data from Refinitiv.
Cook in an interview with Reuters said that Apple is “seeing some macroeconomic weakness in some of the emerging markets.” He later told investors on a conference call that weak markets included Brazil, India, Russia and Turkey. Sales were flat in the fourth quarter in India, Cook said.
“Obviously, we would like to see that be a huge growth,” Cook said on the call.
Apple said the data is less relevant to the strength of its business as customers bundle products, such as an iPhone paired with its wireless AirPods headphones, along with paid subscription services like Apple Music to listen to songs and iCloud storage for photos. Analysts were skeptical.
“Companies typically stop reporting metrics when the metrics are about to turn. This is not a good look for Apple,” said analyst Walter Piecyk from BTIG Research.
The move cost Apple dearly, helping to send shares down about 7 percent in after-hours trading. They later settled at $207.81, about 6.5 percent below their previous close.
“Apple is a complex company with lot of moving parts,” said analyst Ivan Fienseth from Tigress “I think they need to give more transparency to their shareholders and not less.”
But now, Apple will give cost-of-sales data for both its total product businesses and its total services business, which will let investors evaluate a gross margin for both. In the past, Apple gave only an overall gross margin figure for the company.
The new numbers are important for two reasons. First, they will show just how lucrative Apple’s hardware business really is. But more importantly, for the first time they give margin information on Apple’s services business, which reached $10 billion in its fiscal fourth quarter, up 17 percent.
Many of Apple’s fastest-growing businesses are subscription based, like its $9.99 a month Apple Music service. And investors tend to value subscription business through a combination of their revenue growth rate and margins — information that Apple investors will now have, said Tien Tzuo, chief executive of Zuora Inc, a company that helps subscription businesses track their finances.
But one problem Apple investors will face is not knowing what the margin mix is within the services business. Some parts of it, like iCloud storage, are likely lucrative, but others, like Apple Music, are probably less so because Apple has to pay music licenses costs and competes with rival Spotify Technology.
“You would value the music business with one (revenue) multiple closer to Spotify, and the cloud business with a (subscription software) multiple,” said Tzuo. “Having some sense of which business is growing faster would be nice.”


Getting more women into leadership positions top priority: CEO

This June 23, 2018 photo, shows a general view of Riyadh, Saudi Arabia. (AP)
Updated 18 January 2020

Getting more women into leadership positions top priority: CEO

  • Saudi Arabia is focusing on the Business 20 (B20), making this one of the key engagement groups. Women in Business will be Saudi Arabia’s signature topic

RIYADH: The boss of one of Saudi Arabia’s biggest banks says that getting more women into leadership positions is a top priority.
Samba CEO Rania Nashar chairs the action council for Women in Business created by the Business Twenty (B20), which is the official G20 dialogue with the business community. It represents the global business community across all G20 member states and all economic sectors.
She said the council was set up to boost women’s particpation not only in business but also in global leadership positions.
During the launch of the B20 in Saudi Arabia this week, Nashar highlighted the under-representation of women in the economy.
“There is a gap of 27 percent between male and female workers; 75 percent of males are part of the labor force while only 48 percent of females are working,” she said.
She said it was important not to just talk about women as workers but as business owners.

FASTFACT

Saudi Arabia will host the 15th G20 Summit in Riyadh on Nov. 21-22, 2020.

“That’s why entrepreneurship is very fundamental to our task force,” she said.  “The majority of the finance development programs have incentives for giving loans to females; however, despite the fact that many large borrowers are females, the amount of loans granted to them is far below what is granted to males,” she added.
Nashar said that two-thirds of female business founders feel that they were not taken seriously by investors when they pitch for investments. They also feel that they are treated differently from their male counterparts.
Saudi Arabia will host the 15th G20 Summit in Riyadh on Nov. 21-22, 2020. The Kingdom is focusing on the Business 20 (B20), making this one of the key engagement groups. Women in Business will be Saudi Arabia’s signature topic.