Facebook and Twitter are following in Apple’s footsteps by hiding some of their most important numbers. Here’s why investors should be concerned (AAPL, TWTR, FB)


Tim Cook China

Apple, Facebook, and Twitter each announced recently that they would stop disclosing some important data to investors.
Each said other figures better depict the health of their business.
But when companies cease reporting certain figures, it’s often a sign those particular results are starting to deteriorate.
Apple is a case in point; immediately after it announced it would no longer report the number of iPhones it sells, its smartphone sales started to drop.

It’s usually not a good sign when someone stops talking about a bit of information that they frequently bragged about in the past.

If your friends stop bragging about their dating lives, or how great things are going at work, you can probably bet that things have taken a turn for the worse.

So much more is the case when it comes to companies. When they stop disclosing certain numbers they were all too happy to share in the past, there’s a good chance it’s because those figures no longer put them in the best light and may actually highlight the fact that something is going seriously wrong with their business.

The tech industry of late has provided three high-profile examples of this truism.

In recent months, Apple, Facebook, and Twitter each announced that they would no longer be reporting a key figure analysts and investors have used to track their businesses. In each case, the change not only threatens to make the company’s results more opaque, but it also seems to be an attempt to hide something unflattering about the firm’s underlying performance.

Apple stopped reporting iPhone unit sales just before they plunged

Apple, of course, is the most notorious case of the three. In November, it alerted investors and analysts that it would no longer report the number of iPhones or other devices it sold each quarter.

Company-watchers had long scrutinized the figures, particularly for iPhone sales, seeing them as an important indicator of demand for Apple’s products, their share of their markets, and the relative success of the company’s business. But Luca Maestri, the company’s chief financial officer, said Apple’s competitors don’t disclose their unit sales figures, and he argued that the numbers aren’t “necessarily representative” of the health of its business.

Apple is in new lines of business, such as its collection of services, that don’t depend directly on the number of devices it sells, he said. It also now offers devices at a wide range of price points, he said; the sale of a $1,000 iPhone X is obviously much more meaningful to its revenue than a $450 iPhone 7, but both would could as one unit sold.

Investors and even some analysts immediately saw through that line of reasoning. The number of iPhones Apple sold barely grew in its 2018 fiscal year, and Apple watchers worried that the company’s real reason for ceasing its unit-sales reports was because it figured its iPhone sales were about to start to decline. Apple’s stock dropped 7% on the news.

Those fears were soon validated. Within a couple weeks of Apple’s announcement, the first reports started …read more

Source:: Businessinsider – Finance

      

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