Apple’s (NASDAQ:AAPL) Move to Veil its Reports


Apple (NASDAQ:AAPL) ­­­company’s latest move suggests that the company wants to try a new strategy with regard to its financial results. Though reaching a successful fiscal year finish, Apple (NASDAQ:AAPL) is set to make two major changes to its financial statements effective in fiscal year 2015. First, there will no longer be separate retail store reports i.e. the retail stores will no longer be reporting the financial reports at the end of a quarter.

Secondly, the revenues of Apple TV, iPod and Beats along with the revenues of Apple Watch will be reported in a single category called “other”. This move can be very revealing for the individual investors and analysts because like any other company’s change in the reporting format, Apple’s (NASDAQ:AAPL) change in the reporting format has implications from the perspective of an investor, analysts and competitor.

However, competitors need worry the most as now, Apples (NASDAQ:AAPL) results would be hard to interpret and a countermove more difficult to plan. Instead of reporting retail store results separately, the retail results will be reported within the existing geographic segments. And the reason Apple (NASDAQ:AAPL) attributes to the change is “collaboration”.  Apple (NASDAQ:AAPL) reasons: “collaboration across its online, Retail and indirect channels becomes integral to better serve the customers”.

A point worth noting here is that the result of the comparison between the retail revenue and the total revenue of Apple (NASDAQ:AAPL). The annualized retail revenue growth over the years 2009 to 2014 has been 26.6% as compare to the annualized overall revenue growth rate of 38% over the same years. Aggregating the retail results in with the geographical segments would allow Angela Ahrendts to buy some time to fully implement her retail strategy without being demotivated by the analysts.

A success in the strategy would enhance the growth of the retail revenues. Thus, the move seems to be a strategy to implement new policies in retail revenue generation. The other move, combining the revenues of Apple TV (NASDAQ:AAPL), iPod, Beats and Apple Watch (NASDAQ:AAPL) in a sole category is aimed at shrouding the individual revenues of each category. Beats and Apple Watch (NASDAQ:AAPL) which were both initiated in the era of Tim Cook are widely expected to be the revenue growth drivers in this category, an opinion whose conformity the competitors would yearn to check.

But, by aggregating these products it would make it hard for investors to derive individual product revenue for any one of them. The scenario would leave the investor, analysts and competitors to depend on third-party estimates revenue and unit sales figures. While there would be cynicism suggesting that Apple’s (NASDAQ:AAPL) change in reporting format is to obscure poor results, this is not the case. It rather seems like Cook is changing the reporting structure to reflect his vision for the company. Considering the company is close to an all-time high, it seems Cook’s vision is proving to be effective after all.