Investors Interpret Apple's Decision to Withhold iPhone Numbers

Investors Interpret Apple's Decision to Withhold iPhone Numbers

Despite managing to exceed expectations for its Q4 quarterly earnings, Apple still took a beating on the stock market, with shares dropping seven per cent in after-hours trading.

The company, which became the first ever to reach a $1 trillion market cap in August, just reported another record quarter, with revenue up 20 percent from the same time previous year. We told you about Apple's Services contribution, but how did its product lineup do in terms of revenue?

Apple's "privacy commitment now extends to iPhone unit disclosure", Amit Daryanani of RBC Capital Markets wrote in a note to investors. Raymond James analysts said in a statement: "While the company believes units are a less relevant metric, we strongly disagree - particularly since we believe iPhone units will begin to decline y/y as a result of higher average selling prices".

Apple released its latest iPhones, models selling from $1,000 to $1,500, at the tail end of the quarter, and those appeared to get off to a strong start.

On 30 October, the company presented a new Macbook Air, the iPad Pro and mini desktop computer Mac Mini. Following the earnings report, Apple's market cap fell below the $1 trillion mark.

Apple sold 9.7 million iPads during the quarter, gaining share in almost every market it tracked.

Although there may be some logic to the rationale for the long term, "this is going to be a hard pill to swallow in the short term", Ives said.

Maestri also described how the company was supporting enterprise IT through Apple Business Manager, which he said provides a new way for IT teams to deploy Apple devices at scale.

But Apple's decision to be less transparent about its unit sales is tied to the strategy I discussed in Apple Jacked (Premium): With device sales stagnating (iPhone) or even falling (iPad, Mac) each year now, Apple has been forced to raises prices across the board as part of an effort to further monetize each customer. 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.

For Apple, it looks like the iPhone growth - in terms of number of phones - is slowing down. "We've been in discussions with them and the discussions are going quite well", Cook said during the fourth quarter 2018 earnings call Thursday.

Instead, Apple continues to try to focus investors on the strong sales growth for supplementary services, including Apple Music, Apple Pay and iCloud.

At some point Apple will need to figure out what will replace the iPhone, or its growth engine could stall out.