Analysts say AAPL investors need to look inside the company’s “$70 billion black box” — despite the fact that it effectively covers ten different businesses with the company, despite Apple’s Added together the revenue of all your services.
The issue is important for understanding the level of threat posed to Apple by antitrust rules regarding the App Store, they say…
Apple’s more secretive finances
Apple used to be relatively open about its sources of income, which included reporting individual sales figures for the iPhone, iPad, and Mac.
That changed in 2018, when the company announced that it would stop reporting sales numbers, and instead reveal only the revenue streams for each product line. Given the range of retail prices for different models, it became very difficult to gauge how well particular product lines were selling.
Apple Reporting Services revenue as a single figure used to not be much of a problem in the days when we knew it was a very small miscellaneous income for the App Store and other things.
But today things are very different. services are one Huge Elements of the company’s earnings. The business is worth far more than the Mac and iPad, and it’s approaching the combined sum of Mac + iPad + AirPods + Apple Watch. Heck, it’s almost half as big as iPhone revenue as the most recent numbers!
- iPhone: $40.67 billion
- Mac: $7.38 billion
- iPad: $7.22 billion
- Wearable: $8.08 billion
- Services: $19.60 billion
Service is also the only part of Apple’s business where revenue moves in (almost) only one direction – upward.
AAPL investors need to watch the App Store slice
Analysts say they need to see a breakdown of this revenue to properly understand the company’s future prospects. bloomberg Report.
Consider the quarter ended June [where] Services growth of 12% was significantly slower than the 25% that the segment averaged over the past four quarters […]
Apple clearly didn’t include the App Store as one of the many businesses growing the services, as it has done for many years. Instead, Apple said services growth was “primarily due to higher net sales from advertising, cloud services, and AppleCare.”
what’s going on? Could regulatory and legal pressure have an impact on App Store practices and fees? We don’t know, and that’s the point […]
Arete research analyst Richard Kramer, who pointed to Apple’s continued lack of disclosure last March, described the services as “a $70 billion black box amalgamation of 10 different businesses.” It almost feels right.
The App Store is the big unknown here; The general consensus is that the service remains the largest segment of revenue, and its profit margin is estimated at 80%. This means that it contributes most of the benefits of Apple’s services. So if antitrust measures hurt that revenue, that’s a big deal.
Apple faces massive antitrust pressure around the world, with the App Store being the primary focus. For example, in the US, the Open App Market Act – which is close to a vote – would require major changes to the App Store business model, including allowing third-party app stores. How much of an impact this will have on the company’s revenue and profit is something AAPL investors would like to know — and yet they don’t even know how much cash is at stake.
Photo: Milad Fakurian/Unsplash
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