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.

appletvplus 1
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.

Tag: AAPL

Popular Stories

Apple Glass

Apple Smart Glasses: Everything We Know So Far

Wednesday May 21, 2025 8:21 am PDT by
Google made waves yesterday by showcasing a set of lightweight smart glasses featuring deep Gemini integration and an optional in-lens display. The demo has reignited interest in Apple's own smart glasses project, which has been the subject of rumors for nearly a decade. Here's a recap of where things stand. Current Development Status Apple is actively working on new chips specifically...
iPhone 17 Air Pastel Feature

iPhone 17 Air Battery Capacity and Weight Allegedly Revealed

Monday May 19, 2025 2:22 am PDT by
Apple is expected to launch an all-new ultra-thin iPhone 17 Air later this year, and while there have been plenty of rumors about the camera's overall design and thinness, we haven't heard any details about the device's weight and battery capacity until now. According to the leaker going by the account name "yeux1122" on the Korean-langauge Naver blog, the 6.6-inch iPhone 17 Air has a weight ...
Apple CarPlay Ultra instrument cluster themes 01

Apple's CarPlay Ultra Is Here – Does Your iPhone Support It?

Thursday May 15, 2025 5:17 am PDT by
Apple's recently announced CarPlay Ultra promises a deeply integrated in-car experience, but not all iPhone users will be able to take advantage of the new feature. According to Apple's press release, CarPlay Ultra requires an iPhone 12 or later running iOS 18.5 or later. This means if you're using an iPhone 11, iPhone XR, or any older model, you'll need to upgrade your device to access...
WWDC 2025 Banner

Apple Announces WWDC 2025 Schedule, Including Keynote Time

Tuesday May 20, 2025 8:13 am PDT by
Apple today announced a more detailed schedule for its annual developers conference WWDC, which runs from June 9 through June 13. The schedule confirms that Apple's keynote will begin on Monday, June 9 at 10 a.m. Pacific Time, with a live stream to be available on Apple.com, in the Apple TV app, and on YouTube. During the keynote, Apple is expected to announce iOS 19, iPadOS 19, macOS 16,...
macOS 16 visionOS Inspired Feature 1

macOS 16: Everything We Know So Far

Tuesday May 20, 2025 7:31 am PDT by
The Worldwide Developers Conference (WWDC), Apple's annual developer and software-oriented event, is less than three weeks away. We haven't heard a great deal about macOS 16 ahead of its announcement this year, so we could be in for some major surprises when June 9 rolls around. Here's what we know so far about the next major update to Apple's Mac operating system. macOS 16 Name? Every year ...
Apple Glasses Purple Feature

Apple Smart Glasses Launching in 2026

Thursday May 22, 2025 12:22 pm PDT by
Apple is planning to launch a set of smart glasses by the end of 2026, reports Bloomberg. The glasses will be comparable to the Meta Ray-Bans and the Android XR glasses that Google showed off earlier this week. Apple's smart glasses are expected to include cameras, microphones, and AI capabilities, much like the Meta Ray-Bans. The glasses will be able to take photos, record video, provide...
maxresdefault

OpenAI Buys Jony Ive's AI Startup to 'Completely Reimagine What It Means to Use a Computer'

Wednesday May 21, 2025 10:27 am PDT by
OpenAI is acquiring io, the hardware-based AI startup co-created by Jony Ive, OpenAI announced today. Ive has been working with OpenAI CEO Sam Altman on io for two years, and the duo expects to develop a family of AI devices. In a video shared by OpenAI, Altman and Ive outlined their partnership and what they expect to create as a result of the merger. "I have a growing sense that everything ...
Apple CarPlay Ultra instrument cluster themes 01

Apple's 'CarPlay Ultra' Experience Now Available

Thursday May 15, 2025 5:07 am PDT by
Apple today announced that its next-generation CarPlay experience, now dubbed "CarPlay Ultra" begins rolling out today, starting with Aston Martin vehicles. Subscribe to the MacRumors YouTube channel for more videos. CarPlay Ultra is now available with new Aston Martin vehicle orders in the U.S. and Canada. It will also be available for existing models that feature the brand's next-generation ...

Top Rated Comments

rkRusty Avatar
74 months ago
Apple Card, now brought to you by JP Morgan.
Score: 51 Votes (Like | Disagree)
Solomani Avatar
74 months ago
That analyst is clueless. He has no idea how powerful, how entrapping and addicting the Apple Ecosystem is. Once Apple customers get sucked into the Apple Ecosystem, it's very difficult to bail out. And often it starts with a Free Trial. Remember all the clueless analysts that said Apple Music would fail? That it would never ever compete or catch up to Spotify etc? LOL

Apple Music also started with free trials.
Score: 44 Votes (Like | Disagree)
telepheedian Avatar
74 months ago
I know that Goldman Sachs' credit card division is a very different part of the company than the investment banking analysts' division, but this sure is awkward.
Score: 32 Votes (Like | Disagree)
gugy Avatar
74 months ago
This was a smart move by Apple. If their content is indeed great, people will have time to get used to it and eventually keep it in the long run.

I am hoping Apple at some point creates a master subscription plan that includes all their services and iCloud storage at a fair price for individuals and families. That might entice me jumping into other services that at this point I don't care about it.
Score: 30 Votes (Like | Disagree)
TheRealTVGuy Avatar
74 months ago
Further proof that what's good for the shareholders isn't necessarily the same as what's good for the customers.

Buuuut when your executive teams' bonuses are tied to shares of stock (and their value), is it any wonder the kinds of decisions we see?
Score: 20 Votes (Like | Disagree)
OceanMindedBoy Avatar
74 months ago
Is that analyst on crack or something? Giving people the chance to experience Apple TV+ for free for a year will return in greater profits.
Score: 20 Votes (Like | Disagree)