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](https://images.macrumors.com/t/CB38a4G6TKKANGdeGDXUUBZLDO8=/400x0/article-new/2019/03/appletvplus-1-800x302.jpg?lossy)
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.
Popular Stories
Following nearly two years of rumors about a fourth-generation iPhone SE, The Information today reported that Apple suppliers are finally planning to begin ramping up mass production of the device in October of this year. If accurate, that timeframe would mean that the next iPhone SE would not be announced alongside the iPhone 16 series in September, as expected. Instead, the report...
Key details about the overall specifications of the iPhone 17 lineup have been shared by the leaker known as "Ice Universe," clarifying several important aspects of next year's devices. Reports in recent months have converged in agreement that Apple will discontinue the "Plus" iPhone model in 2025 while introducing an all-new iPhone 17 "Slim" model as an even more high-end option sitting...
Apple supply chain analyst Ming-Chi Kuo today shared alleged specifications for a new ultra-thin iPhone 17 model rumored to launch next year. Kuo expects the device to be equipped with a 6.6-inch display with a current-size Dynamic Island, a standard A19 chip rather than an A19 Pro chip, a single rear camera, and an Apple-designed 5G chip. He also expects the device to have a...
Apple typically releases its new iPhone series around mid-September, which means we are about two months out from the launch of the iPhone 16. Like the iPhone 15 series, this year's lineup is expected to stick with four models – iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max – although there are plenty of design differences and new features to take into account. To bring ...
Apple’s iCloud Private Relay service is down for some users, according to Apple’s System Status page. Apple says that the iCloud Private Relay service may be slow or unavailable. The outage started at 2:34 p.m. Eastern Time, but it does not appear to be affecting all iCloud users. Some impacted users are unable to browse the web without turning iCloud Private Relay off, while others are...