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.
Popular Stories
Apple has announced it will be holding a special event on Tuesday, May 7 at 7 a.m. Pacific Time (10 a.m. Eastern Time), with a live stream to be available on Apple.com and on YouTube as usual. The event invitation has a tagline of "Let Loose" and shows an artistic render of an Apple Pencil, suggesting that iPads will be a focus of the event. Subscribe to the MacRumors YouTube channel for more ...
Apple today released several open source large language models (LLMs) that are designed to run on-device rather than through cloud servers. Called OpenELM (Open-source Efficient Language Models), the LLMs are available on the Hugging Face Hub, a community for sharing AI code. As outlined in a white paper [PDF], there are eight total OpenELM models, four of which were pre-trained using the...
Apple has dropped the number of Vision Pro units that it plans to ship in 2024, going from an expected 700 to 800k units to just 400k to 450k units, according to Apple analyst Ming-Chi Kuo. Orders have been scaled back before the Vision Pro has launched in markets outside of the United States, which Kuo says is a sign that demand in the U.S. has "fallen sharply beyond expectations." As a...
Apple is finally planning a Calculator app for the iPad, over 14 years after launching the device, according to a source familiar with the matter. iPadOS 18 will include a built-in Calculator app for all iPad models that are compatible with the software update, which is expected to be unveiled during the opening keynote of Apple's annual developers conference WWDC on June 10. AppleInsider...
The upcoming iOS 17.5 update for the iPhone includes only a few new user-facing features, but hidden code changes reveal some additional possibilities. Below, we have recapped everything new in the iOS 17.5 and iPadOS 17.5 beta so far. Web Distribution Starting with the second beta of iOS 17.5, eligible developers are able to distribute their iOS apps to iPhone users located in the EU...
Top Rated Comments
Apple Music also started with free trials.
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.
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?