Apple told CNBC in a statement that it does not expect the launch of Apple TV+ 'to have a material impact on our financial results,' as Goldman estimated.
which hit the stock, taking issue with the firm's negative characterization on how Apple would account for its new TV+ service.
Goldman said that the one-year free trial of the TV+ service would have a "material negative impact" on earnings by showing lower hardware profit margins. Goldman believes that this issue will send the stock significantly lower so it cut its 12-month price target.TV+, including the accounting treatment for the service, to have a material impact on our financial results," the company said in a statement to CNBC.
The note was not accusing Apple of improper accounting. Instead, Goldman analyst Rod Hall believes that the company's profit margins for hardware will suffer as a result of the TV+ free trial. Hall said this would result "in a negative calculated impact to EPS of 16%" for fiscal first quarter 2020. "Effectively, Apple's method of accounting moves revenue from hardware to Services even though customers do not perceive themselves to be paying for TV+," Hall said.
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