The reason Apple is now hiding iPhone sales figures
Considering how well Silicon Valley has done out of Wall Street, techies do not seem to hold their besuited peers in much regard.
Technology companies often whine that the rigours of quarterly financial reporting, the short-term responses of investors, and the demand that they make a profit, run counter to their true calling of changing the world.
Just one look at the stock market performance of the tech industry in recent years shows this to be nonsense. The majority of the most valuable companies in America are internet or computer giants.
The likes of Amazon and Tesla have received massive valuations despite years without making profits. And Wall Street has overlooked many a privacy and political scandal at Facebook.
But unimaginable riches have not brought Silicon Valley much joy. This year, Elon Musk declared he was fed up of Tesla being a public company. And many younger start-ups have chosen to take huge amounts of private capital to avoid the gaze of the public markets.
Last week, Apple said it would provide less information to investors and analysts, no longer revealing how many iPhones, iPads and Macs it sells each quarter.
The news, combined with a disappointing forecast for the forthcoming Christmas quarter, sent shares tumbling and pushed Apple below the trillion-dollar valuation it had achieved three months earlier.
Apple is under no obligation to reveal how much of each device it sells. Public companies in the US are required to reveal their income statement, balance sheet, and cash flow figures, and nothing more.
After all, surely what should be important to investors is not the number of gadgets Apple sold in any three-month period, but how much revenue and profit it is making.
The number of iPhones sold seems closer to a piece of trivia than a relevant piece of financial information. This is how chief financial officer Luca Maestri put it, saying such figures are “not necessarily representative of the underlying strength of our business”.
This may be true, but Apple has revealed its sales numbers for decades. So when it changed course last week, investors jumped to the most logical conclusion. They took the news that Apple was going to stop saying how many iPhones it has sold as a sign the number was going to fall.
Silicon Valley companies tend to provide financial transparency when it suits them. Facebook provides exhaustive data on how many users it has in each geography, and how much money it makes from them. But it does not reveal how much it makes from Instagram, perhaps because it does not want to give the impression that is where Facebook’s future lies.
Twitter provides monthly user figures, but not the daily figures that Facebook and Snapchat do. Amazon has turned vagueness into an art form, often choosing to announce it has sold “millions” of something, a figure about as useful as saying nothing.
Apple’s business has changed immensely in just a few years. After the iPhone was released in 2007, and the iPad in 2010, both grew rapidly. But iPad sales peaked in 2014 and those of the iPhone have been flat since 2015.
Apple’s strategy is less about selling more gadgets these days than selling more expensive ones.
Apple would likely prefer fewer headlines about sales falling and, without accurate sales figures, they can no longer be written.
But it is not as if such transparency has hurt Apple. Shares have doubled in the last three years even as iPhone sales have been flat. If Apple had nothing to hide, it would not be hiding.