Apple Disputes Goldman Sachs Analyst Report Claiming Free Year of Apple TV+ Will Impact Earnings

Goldman Sachs this morning cut its target price for Apple's stock from $187 a share to $165 a share, claiming Apple's plans to give away free access to its upcoming Apple TV+ service will cause a "material negative impact" on earnings because of how the accounting for the service will work.


Goldman Sachs' Rod Hall said that Apple would account for the one-year free trial as a combined hardware and services bundle discount, which would show lower hardware profit margins.
"We believe that Apple plans to account for its 1-year trial for TV+ as a ~$60 discount to a combined hardware and services bundle," wrote Goldman analyst Rod Hall, in a note.

"Effectively, Apple's method of accounting moves revenue from hardware to Services even though customers do not perceive themselves to be paying for TV+. Though this might appear convenient for Apple's services revenue line it is equally inconvenient for both apparent hardware ASPs and margins in high sales quarters like the upcoming FQ1′20 to December," Hall added.
Apple in a statement to CNBC disputed Goldman Sachs' negative call and said that it does not expect the introduction of Apple TV+ to have an impact on its financial results.
"We do not expect the introduction of Apple TV+, including the accounting treatment for the service, to have a material impact on our financial results," the company said in a statement to CNBC.
Apple is planning to provide one free year of Apple TV+ access to all customers who purchase an iPhone, iPad, iPod touch, Apple TV, or Mac, aka any device able to play the service's TV shows and movies.

For those who do not get Apple TV+ for free through a device purchase, Apple is charging $4.99 per month for the entire family. Apple TV+ is set to launch on Friday, November 1.

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Apple Becomes Trillion Dollar Company Again

Apple has regained its status as a trillion dollar company by market cap, which is its total outstanding shares multiplied by its stock price.


Apple achieved this milestone by hitting a stock price above $221.28 in intraday trading today, giving it a market cap slightly over $1,000,000,000,000 based on its 4,519,180,000 outstanding shares as of July 19, 2019, which the company disclosed in its most recent quarterly 10-Q filing with the SEC.

Apple first achieved a trillion dollar valuation in August 2018 with a $207 share price, but the company continues to buy back its shares, which is why it took a higher share price this time around to hit the 13-digit milestone.

Apple's stock is up over three percent since it hosted its annual iPhone and Apple Watch event at Steve Jobs Theater yesterday.

Apple and Microsoft, valued at around $1.03T, are currently the only U.S. companies with a trillion dollar market cap, but Amazon has achieved the milestone in the past and Google parent company Alphabet has come very close.

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Apple’s Stock Surges After U.S. Delays Additional 10% Import Tariff on Products Like Cell Phones and Laptops

Apple's stock has surged around five percent after the United States Trade Representative announced that an additional tariff of 10 percent on approximately $300 billion of Chinese imports will be delayed to December 15 for products such as cell phones, laptop computers, and monitors, per CNBC.


Moreover, the USTR said certain products are being removed from the tariff list based on "health, safety, national security and other factors" and will not be subject to the additional tariff of 10 percent whatsoever. It is unclear if this decision applies to any Apple products or accessories.


The USTR said it will provide additional details and lists of the tariff lines affected by this announcement on its website today.

The new tariff kicks in September 1 for the remaining Chinese imports impacted.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Tags: China, AAPL

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Apple Earnings Preview: All Eyes on Next Quarter’s Guidance Ahead of New iPhones, Apple Card, and Apple TV+

Apple is set to report its earnings results for the third quarter of its 2019 fiscal year at 1:30 p.m. Pacific Time today.

The quarter began March 31, 2019 and ran through June 29, 2019, according to Apple's fiscal year accounting calendar.

Apple's guidance for the quarter from April 30:
  • revenue: $52.5 billion-$54.5 billion
  • gross margin: 37-38 percent
  • op. ex.: $8.7 billion-$8.8 billion
  • other income/expense: $250 million
  • tax rate: approximately 16.5 percent
Apple's guidance suggests it will report its second-best third quarter ever by revenue:
  • 2014: $37.4 billion
  • 2015: $49.6 billion
  • 2016: $42.4 billion
  • 2017: $45.4 billion
  • 2018: $53.3 billion
  • 2019: $52.5+ billion
Wall Street's revenue estimates average out to $53.39 billion, slightly below the midpoint of Apple's guidance, based on 33 analysts tracked by Yahoo Finance. Earnings per share is estimated to be $2.10.

Key Facts and What to Look For

  • iPhone revenue of $26.5 billion, according to a Bloomberg average.
  • Product launches in the third quarter: 13-inch and 15-inch MacBook Pro refresh on May 21 (excluding entry-level 13-inch model, which was updated in July) and seventh-generation iPod touch on May 28.
  • Apple's guidance for its fourth fiscal quarter, which typically encompasses the launch of at least some new iPhone models in mid-to-late September. Wall Street expects fourth quarter revenue to be $61 billion, down around three percent year-over-year, according to Bloomberg.
  • Apple's revenue in Greater China and any potential commentary regarding the U.S.-China trade war. Apple reported revenue of $9.5 billion in Greater China in the year-ago quarter, which was 19 percent growth.
  • Apple's services revenue reached an all-time high of $11.45 billion in the second quarter, and investors will be looking for continued growth from the launch of Apple News+ six days before the third quarter began. The upcoming launches of the Apple Card later this summer and Apple Arcade and Apple TV+ in the fall could also be at least partially baked into Apple's fourth quarter guidance depending on exact launch dates.
  • Apple's "Wearables, Home, and Accessories" category also remains key. Last quarter, Apple said the category was the size of a Fortune 200 company, buoyed by the success of the Apple Watch and AirPods.
Apple's CEO Tim Cook and CFO Luca Maestri will discuss the company's earnings results on a conference call at 2:00 p.m. Pacific Time today. MacRumors will highlight key points from the one-hour call as it occurs live.

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What to Expect From Apple’s Second Quarter Earnings Results Today

Apple is set to report its earnings results for the second quarter of its 2019 fiscal year at 1:30 p.m. Pacific Time today.

The quarter began December 30, 2018 and ran through March 30, 2019, according to Apple's fiscal year accounting calendar.

Apple's guidance for the quarter from January 29:
  • revenue between $55 billion and $59 billion
  • gross margin between 37 percent and 38 percent
  • op. ex. between $8.5 billion and $8.6 billion
  • other income/expense of $300 million
  • tax rate of approximately 17 percent before discrete items
Apple's guidance suggests that it will report at least its third-best second quarter ever based on revenue:
  • 2015: $58 billion
  • 2016: $50.6 billion
  • 2017: $52.9 billion
  • 2018: $61.1 billion
  • 2019: $55+ billion
Wall Street analysts forecast that Apple will report $57.4 billion revenue, above the midpoint of its guidance, and earnings per share of $2.36, according to 28 estimates averaged by Yahoo Finance.

What to Look For

Apple's CEO Tim Cook and CFO Luca Maestri will discuss the company's earnings results on a conference call at 2:00 p.m. Pacific Time today. MacRumors will loosely transcribe the one-hour call as it occurs live.

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18 Key Takeaways From Apple’s First Earnings Call of 2019

Apple yesterday reported its earnings results for the first quarter of the 2019 fiscal year. Apple's CEO Tim Cook and CFO Luca Maestri then went on a conference call with analysts to discuss the results. Key takeaways are below.


  • Revenue of $84.3 billion. For financial details, see our earnings report coverage.
  • 1.4 billion active devices at end of quarter.
  • Apple Music now has over 50 million paying subscribers.
  • App Store set single-day spending record: over $322 million on New Year's Day.
  • 1.8 billion Apple Pay transactions in quarter, more than 2x vs. year-ago quarter.
  • Target, Taco Bell, and Jack in the Box stores in U.S. will accept Apple Pay soon.
  • Apple News now has over 85 million monthly active users.
  • Apple News launching in Canada later this quarter. English and French.
  • Apple's gross margin was 34.3% for hardware products and 62.8% for services.
  • Apple remains on track to double its fiscal 2016 services revenue by 2020.
  • Apple now has 360 million paid subscriptions across its services.
  • Apple expects to surpass 500 million paid subscribers across its services in 2020.
  • Wearables revenue driven by "amazing popularity" of Apple Watch and AirPods.
  • Wearables category is "approaching the size of a Fortune 200 company."
  • 506 Apple Stores across 22 regions at end of quarter.
  • Apple ended the quarter with $245 billion in cash plus marketable securities.
  • Apple to provide update on its capital return program in March earnings report.
  • iPhone XR is best-selling iPhone model, then iPhone XS Max, then iPhone XS.
More coverage:A replay of the conference call is available on Apple's website for a limited time.

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Apple to Announce Earnings Today Following First Revenue Warning in 16 Years, End of Unit Sales Reporting

Apple is set to report its earnings results for the first quarter of its 2019 fiscal year at 1:30 p.m. Pacific Time today.

The quarter began September 30, 2018 and ran through December 29, 2018, according to Apple's fiscal year accounting calendar.

Apple issued a rare earnings warning for the quarter on January 2, its first in over 16 years. The revised guidance is as follows:
  • revenue of approximately $84 billion
  • gross margin of approximately 38 percent
  • op. ex. of approximately $8.7 billion
  • other income/expense of approximately $550 million
  • tax rate of approximately 16.5 percent before discrete items
Apple's initial guidance for the quarter on November 1:
  • revenue between $89 billion and $93 billion
  • gross margin between 38 percent and 38.5 percent
  • op. ex. between $8.7 billion and $8.8 billion
  • other income/expense of $300 million
  • tax rate of approximately 16.5 percent before discrete items
Apple's guidance suggests it will report its second-best first quarter results ever, based on revenue, behind its 2018 record of $88.3 billion:
  • 2015: $74.6 billion
  • 2016: $75.9 billion
  • 2017: $78.4 billion
  • 2018: $88.3 billion
  • 2019: $84 billion

What to Look For

  • Apple's revised guidance suggests it will report its first holiday quarter sales decline since 2001, although it would still be the company's second-best quarter ever in terms of revenue.
  • This is Apple's first earnings report in which it will not disclose iPhone, iPad, or Mac unit sales, a change it announced back on November 1. Apple's financial chief Luca Maestri said Apple may provide qualitative commentary about sales if necessary, so it will be interesting to see how the conference call and question-and-answer session play out.
  • In a letter to shareholders on January 2, Apple CEO Tim Cook disclosed that Apple's revenue will be lower than its original guidance for the quarter, coming in at approximately $84 billion. Apple initially guided for revenue of $89 billion to $93 billion in the quarter on November 1. Look for any potential commentary surrounding the shortfall.
  • Apple's guidance for its second quarter of fiscal 2019, which began December 30 and so far only encompasses the launch of new Smart Battery Cases for the iPhone XS, iPhone XS Max, and iPhone XR. It could eventually include new iPads, a new iPod touch, new AirPods, the AirPower, more. Analysts expect revenue of around $58.9 billion in the second quarter, compared to $61.1 billion in the year-ago quarter.
  • Continued growth of Apple's Services category, including the App Store, Apple Music, iCloud, iTunes, Apple Pay, and AppleCare. Last quarter, Apple's services brought in a record $9.9 billion revenue. Apple has said it is still on target to double its fiscal 2016 services revenue by fiscal 2020. Analysts expect services revenue of around $11 billion in the quarter.
  • Continued growth of Apple's Wearable, Home, and Accessories category, previously named Other Products, including the Apple Watch, Apple TV, HomePod, AirPods, Beats, iPod touch, and accessories—particularly as Apple diversifies revenue beyond the iPhone.
Apple's CEO Tim Cook and CFO Luca Maestri will discuss the company's earnings results on a conference call at 2:00 p.m. Pacific Time today. MacRumors will loosely transcribe the one-hour call as it occurs live.

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AAPL Stock Recoups Losses Incurred After Tim Cook Slashed Apple’s Revenue Guidance

AAPL shares are currently trading above the $157 mark on the intraday market, recouping virtually all losses incurred since Apple CEO Tim Cook slashed Apple's revenue guidance by up to $9 billion for the first quarter of its 2019 fiscal year.


AAPL closed at $157.92 on January 2, immediately prior to Cook revealing the shortfall in an after-hours letter to shareholders, and is now trading just cents below that level. The stock has gradually recovered over the past two weeks since establishing a new 52-week low of $142 on January 3.


Apple originally guided for revenue of between $89 billion and $93 billion in the three-month period ending in December, but revised its estimate to $84 billion due to "fewer iPhone upgrades" than it anticipated, primarily due to "significantly greater" economic weakness than it projected in the Greater China region.

The letter sparked concerns among some investors and analysts that Apple has reached "peak iPhone," especially given Apple's revelation that it will no longer disclose unit sales in its quarterly earnings reports going forward.

While the iPhone accounts for around two-thirds of Apple's revenue, the company has repeatedly touted the continued growth of its services, including the App Store, Apple Music, iCloud, iTunes, and so forth, which combined for a nearly 19 percent increase in revenue on a year-over-year basis in the quarter.

Apple is widely expected to launch a streaming TV service this year that will likely boost the revenue of that category even further.

In his letter to shareholders, Cook said Apple is undertaking and accelerating multiple initiatives to improve its results, including making it simple to trade in a phone at its stores. Back in November, Apple launched a promotion offering up to $100 in extra trade-in credit towards a new iPhone XR or iPhone XS.

AAPL will report its earnings for the first quarter of fiscal 2019 on January 29, followed by a conference call to discuss the results at 2 p.m. Pacific Time.

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Apple Faces Second Class Action Lawsuit Threat Over Failing to Warn Investors About Slowing iPhone Demand

New York-based law firm Bronstein, Gewirtz & Grossman has announced it is investigating whether Apple and certain executives violated U.S. federal securities laws after the company lowered its revenue guidance by up to $9 billion for the first quarter of its 2019 fiscal year earlier this week.


The law firm is conducting the investigation on behalf of AAPL shareholders, with potential for a class action lawsuit, and encourages affected investors to obtain additional information and assist the investigation by visiting its website.

Bernstein Liebhard LLP, another New York-based investor rights law firm, launched a nearly identical investigation of Apple earlier this week.

Apple CEO Tim Cook in a letter to shareholders this week disclosed that Apple's revenue for the quarter just ended will be approximately $84 billion, significantly lower than its original guidance of $89 billion to $93 billion, due to "lower than anticipated iPhone revenue, primarily in Greater China."

Both investigations contrast the positive language that Cook has previously used when speaking about China with the weaker language used in his letter to shareholders this week, in which he said Apple "did not foresee the magnitude of the economic deceleration, particularly in Greater China."
On January 2, 2019, Apple revealed that its revenue for the first fiscal quarter of 2019 would be more than 7% lower than it expected because of "[l]ower than anticipated iPhone revenue, primarily in Greater China, [which] accounts for all of [Apple's] revenue shortfall to [its] guidance and for much more than [its] entire year-over-year revenue decline."

Conversely, on November 1, 2018 CEO Tim Cook stated during Apple's fourth quarter 2018 conference call, that "[o]ur business in China was very strong last quarter. We grew 16%, which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there."
In other words, both law firms are investigating whether Apple failed to warn investors about slowing iPhone demand, particularly in China.

AAPL closed at $142.19 on Thursday, down 36 percent from a closing price of $222.22 on November 1, immediately prior to Apple's last earnings report. As a result, Apple's market valuation has plunged from a peak of around $1.1 trillion to under $700 billion, falling behind rivals Amazon, Microsoft, and Google.

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AAPL Opens at $144, Sliding Nearly 10% After Major Revenue Cut and Down 35% Since Early November

AAPL has opened at $144 today on the stock market, with share prices sliding roughly nine percent after Apple lowered its revenue guidance by up to $9 billion for the first quarter of its 2019 fiscal year.


AAPL is down just over 35 percent since closing at $222.22 on November 1, just prior to its last earnings report.

In a letter to shareholders on Wednesday, Apple disclosed that its revenue will be lower than its original guidance for the first quarter of its 2019 fiscal year, coming in at approximately $84 billion. Apple originally guided for revenue of $89 billion to $93 billion in the quarter on November 1.

The letter said lower than anticipated iPhone revenue, primarily in Greater China, accounts for the entire shortfall.

More details to follow…

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