Updated: Feb 28, 2019

Laurel and Hardy

On the cost of silence, at times an euphemism for obfuscation.

On Friday 2nd of November Apple said it would stop reporting unit sales. Following in the wake of a downbeat estimate of fourth-quarter sales, the announcement knocked the iPhone company’s share price down by 7%.

The wipe-out of US$70bn from a company’s stock market value in one single session – a tad more than what most listed companies on the planet can boast about their market capitalisation – would by itself have been an interesting piece of news.

Yet I found more food for thought in the claim that part of the drop was down to the upcoming change in the way the company will start reporting revenue – from next quarter, it will skip unit sales and report a raw revenue figure only.

At least two effects seem to have punished the share price: first, that the value of the Apple stock would now be harder to figure out; second, that the cutback in disaggregated information might be masking a weakness in unit sales, only countered by price rises.

But there is a third effect that might impact company valuation harder – the erosion of trust when the company retains crucial information without offering a convincing explanation for doing so.

Investors and analysts are generally not stupid – why play cat and mouse with them?

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