Apple dropped a surprise bombshell during their Fourth Quarter Financial Call a few days ago, informing analysts that they will no longer report device sales or make sales projections. This is a major shift away from what people have come to expect from Apple, so it has caused a mini uproar among analysts, the tech press and Apple blogs.
Some of this hand wringing is just to generate clicks, plain and simple. There are chicken littles who think Apple’s sky is actually going to fall this time. There is always the “I told you so” crowd. Some of this backlash is just faux outrage. And as usual. the is a smaller but wiser group who are willing to step back, look at the bigger picture, and take a longer view. That one always seems to pay off when looking at Apple.
The simple fact is this- Apple has a responsibility to its investors to give them the best return on investment possible. There was a time when bragging about device sales numbers worked in their favor in this regard. For years it seemed like iPhone sales did nothing but increase, sometimes exponentially. For its first few years the iPad also did the same and the Apple Watch is still on that upward trajectory right now. When this was the case across the board, it was a no-brainer for Apple to focus on the positives.
However, in more recent quarters Apple’s device sales numbers have caused more harm than good, at least to the stock price. You have analysts continually trying to read the tea leaves and project what is happening with Apple based not only on the quarter’s sales numbers, but also Apple’s guidance for future sales. There have been situations when the current sales numbers and profitability were great, but growth and future projections caused the stock price to trend downward right after an earnings call.
We’ve seen the obsession over device sales numbers reach a fever pitch in the last year, as the insanity over the iPhone X may have been the final straw for Apple. Analysts lead thing off by going all in on reading the supply chain tea leaves and predicted poor to disastrous sales numbers for the X. Then the click bait gang, lead by guys like Ewan Spence, fanned the flames and filled the tech echo chamber with nonsense. By the eve of Apple’s results earlier this year, the tech press had bought in and even the mainstream media was reporting on Apple facing problems with the iPhone X. And then the real numbers came in and all of this was wiped out in an instant.
I can’t help but think this situation started the brass at Apple thinking about shifting how they deliver their earnings information. They aren’t legally required to give direct sales numbers with their earnings. Just look at Microsoft, as they don’t provide them for the Surface. It isn’t to their advantage to do so. The same is the case with Google and their Pixel phones and Pixelbook. They tend to report sales growth numbers because they look good, even if the raw sales numbers are still pedestrian by industry standards. They stick to whatever will work to bolster their sales and profitability numbers, and in turn, their stock prices.
It has taken a while, but I think Apple has finally decided to move away from this tradition of stating iPhone sales numbers. They really don’t give direct numbers for anything beyond the iPhone and iPad, anyway. With their diversification to focus more on services revenue, and with new wearables products that have proved to be very profitable, there are new sources of revenue for Apple today. It no longer makes sense for the company to give analysts ammunition to bolster the idea that the iPhone is their only viable business anymore.
Now, I will say that Apple didn’t handle this situation particularly well. The way that they just flatly delivered the news of a major shift in their reporting at the end of the earnings call was strange, and it resulted in a media backlash. It’s seems odd to me that a company that has gone to great pains to prep customers in advance for changes like the disappearance of the headphone jack and the switch to the Lightning port would lay this news on the financial and tech press cold turkey.
That said, the uproar over this is still pretty ridiculous. I know that Apple is the largest company in the world, but that doesn’t mean that they should be held to a different standard when it comes to something as routine as earnings reporting. If they aren’t legally required to give sales numbers and their competition isn’t, then why punish them for it? I know it’s a change in how they have done things, but it is their right to do it. And again, I can’t blame Apple one it for making this change. The people who are overreacting to this news now are, by and large, the same ones who botched predictions of iPhone X sales and artificially drove Apple’s stock price down earlier this year.