Last week we talked about the fourth quarter results and the FY 2018 summary from Apple -this link- At the end of it, we mentioned that Apple made a strange and surprising decision, which is to hide future sales of digital devices. This decision was not simple, as it caused Apple's share price to drop by nearly 10%, "close to 100 billion dollars," and expelled Apple out of the club of trillion companies, of which it was the only member. So why did Apple make this strange decision and how would it affect the future of the company? Is the secret predicting a sales collapse?

Why did Apple decide to hide the sales numbers for its devices in the future?


Important clarification

This article is based on an expectation and analysis of why Apple made this decision; That is, we are trying to imagine how Apple and its leaders thought when taking it; It does not mean at all that we support this matter, but rather we are angry with it because it deprives us of the pleasure of analyzing and comparing numbers as we always do. That is, in this article, we explain a decision and do not justify a decision, as some think when we do this clarification matter.


Money is important, not quality

Apple said it openly in the comment, which is that the primary goal of any investor anywhere is to make more money. Yes, this is a fact, as companies were established to make money not to do humanitarian work; This is what Apple meant, and it makes sense from a purely physical point of view. For example, which one is better if the company tells you that it sold 200 million iPhones and won 10 billion or sold 150 million iPhones and won 20 billion. The important thing is the profits because you are an investor and not an online hobbyist who wants an impressive sales number to annoy his friends, who love other companies.

So Apple decided to hide the number of devices sold and everything related to the "number", but it will continue to tell us, in money terms, how much the revenue was and how much it earned from the sale.


Reducing the influence of rumors

Another goal Apple wants to hide sales numbers is to reduce the impact of rumors; When we hear rumors about Mac computers, for example, and that no one wants to buy them, then we find the report that says a rise in revenues from Mac “caused by the increase in price, as we will explain in the next paragraph.” Here the rumors gradually begin to weaken because with the time the source, whether it is a specific analyst or a newspaper, loses its credibility More than once you talk about the collapse of a sector and we find that the returns are increasing, so the investor begins to ignore any rumors about the numbers because they cannot be confirmed and sales show an increase.

So far, all of the above is very logical, so why were investors angry at Apple's decision, then, causing Apple to lose 10% of its value?


The yield from higher prices

We explained this point in detail in the Fiscal Year article -this linkWe will repeat it briefly here because we will need it; Apple recently started to increase the prices of its devices, clearly and significantly. Imagine that the iPhone reaches the price of the higher version to about $ 1600, while the iPad reaches $ 2100 for the higher version (California prices including VAT tax), meaning that Apple profits more from raising the price of the device and not increasing the popular base, and here is the risk for the future.

An image showing the cost in case you want to purchase the higher-end iPhone and iPad from the Apple California Store.

To see how you can manipulate numbers; Imagine with me that Apple is selling 200 million iPhones at an average price of $ 700, which is 140 billion dollars in total. And the following year, sales decreased to 175 million, but the average increased to $ 800, a total of 140 billion as well. If Apple announces sales numbers, it will appear that the devices sold have decreased, but if you announce sales and hide the number, then here you will see that the number is fixed at 140 billion, and even increased profits (Apple's profit margin is high) and here the news will be positive. In this way, the number of the devices sold is hidden completely opposite to the news, from negative to positive news.

See the following picture, and you will see that the revenue of the iPhone clearly jumped in 2018, but digitally, Apple sold almost the same number of devices, as the number increased from 216.7 million to only 217.7 million.


The importance of a large popular base

Are Samsung sales bigger in 2018 or 2017? Of course, 2017 was bigger, and so was 2016 greater than 2017. But Samsung is facing a problem, which is the rise of China (Huawei - Xiaomi - Oppo), but due to the enormity of the popular Samsung base, it is still on top of the companies. When you have 200 million customers and 20 million get angry and decide to change, that means 10%, but if you have 100 million and 20 million leave you, that means 20%. And there is the importance of the broad popular base that it believes in your collapse. But if you have a few clients, leaving them will spell disaster. Therefore, the investor always needs to know the number of users of Apple devices to know whether it has a large number of customers, and if a product is issued with a problem and some get angry, it will not affect severely. Or the number is small. If some of them get angry and leave Apple, it will be a disaster.


Conclusion

Apple wants to significantly reduce available information and accordingly will become more resistant to rumors and negative news. On the other end, the information is very important to the investor, the more information is reduced, the more ambiguous the matter becomes, the additional risk and the greater difficulty in predicting the future. Thus, the average investor or the simple analyst is moving away from Apple and heading to it only two categories, namely, large investors who have huge analytical institutions that can accurately know sales Or the very simple investor who trusts the apple and sees it, it will reach 2 trillion, and this belief is driven by love and loyalty, not sales and numbers.

So, do not be surprised to see a fluctuation in Apple's stock during the coming weeks, up and down, but with time, it will return again to the trillion club and even compensate for all its losses (if there are no political crises affecting the economy).

Are the reasons cited convincing you? Or is there another reason behind Apple hiding the sales number for its devices? Share us in the comment

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