Apple’s market value unofficially fell under the $US1 trillion level in after-hours trading on Friday as investors continued to sell off the stock in the wake of the weak December quarter outlook (implying little or no growth in sales) and an announcement that it is going to stop issuing figures detailing how many products – especially iPhones – it sells each quarter.
That decision means there will be a reduction in the level if transparency that there was at Apple. The shares will become more volatile as investors and analysts seek this information from other sources, which will surely happen at times when the share price is vulnerable and the price plunges.
Analysts said that news, more than the weak outlook for the December quarter (showing no growth in the busiest time of the year for the company compared to a year ago), was responsible for a near 7% slide in the value of the company after hours. $US70 billion was wiped from the value of the company in regular and after hours trading on Friday.
Apple shares fell 6.63% on Friday, closing at $US207.48 to be down more than 4% for last week and at a 10 week low. They then dipped another 0.35% in after-hours trading to close at $US206.76, under $US207.05, which is the level where the trillion dollar value is set, based on the reported number of shares on issue of 4.83 billion.
Analysts say that when Apple files its official quarterly report with the SEC, it will update its issued share number.
Apple is in the midst of a new $US100 billion buyback so that the number of shares on issue and valuation figure has probably shrunk. There hasn’t been an update for several months. Apple shares peaked at $US232.07 on October 3, meaning the shares have lost more than $US120 billion in value since then at Friday’s close.
Apple has revealed quarterly unit sales for its products for the past decade or more (since the iPhone was introduced nearly 11 years ago). Now CEO Tim Cook told the post result briefing the company will stop the practice, leading some media and market analysts to wonder if it is a recognition that the company is now firmly at peak iPhone and from now on will depend more heavily on replacement sales, rather than mainly on sales to new customers.
iPhone sales in the 4th quarter were flat at 46.9 million units, but that was mostly ahead of the new model’s introduction. That data is at this webpage on the Apple site.
A report on marketwatch.com declared “Investors should clearly take this as a sign that unit sales will decline in the future, and they will not be told. Apple’s reasoning for the move was laughable.”
On the media briefing, CEO Cook compared calculating the performance of a company valued at more than $1 trillion (at least until the stock opens on Friday) to an individual going grocery shopping.
“This is a little bit like if you go to the market and you push your cart up to the cashier and she says or he says ‘how many units do you have in there?’” Cook said.
Marketwatch pointed out that “While Cook’s explanation was aggravating, Chief Financial Officer Luca Maestri’s was just confusing. He said Apple will stop reporting the important figure because it … wants to make customers happy?
“As I know you’re aware, by the way, our top competitors in smartphones, in tablets, in computers do not provide quarterly unit sales information either,” Maestri said.
“It’s obviously going to create questions about whether Apple can ever return to the number of units it sold in 2015,” said Walt Piecyk, telecoms analyst at BTIG Research, pointing to Apple’s lower-than-expected guidance for the fourth quarter. “Units haven’t been relevant for three years. The stock seems to have done well when they reported those numbers.”
“There will probably be a lot of pushback about not giving iPhone unit data,” Jim Suva, an analyst at Citi, told Mr. Maestri on Thursday’s earnings call. “Some people may fear that this means that iPhone units are going to start going negative year-over-year. It’s easier to talk about great things and not talk about the things that are not going so great.”
