Apple’s reaction to the Goldman Sachs analyst note

Apple has stuck out at Goldman Sachs in a relatively rare public report among the Wall Street companies.

The dispute came after Goldman Sachs analyst Rod Hall criticized Apple’s accounting methods for the new TV + product of the technology giant, saying in a research note that it could lead to lower gross margins and profits.

In response, Apple said it did “not expect the introduction of Apple TV+, including the accounting treatment for the service, to have a material impact on our financial results.”

A Goldman spokeswoman declined to comment. Apple also declined to comment on its relationship with Goldman beyond commenting on the note.

While the research departments of big banks on Wall Street have Chinese walls separating them from other jobs, the rare public conflict is a critical moment between the two companies.

Goldman Sachs has subscribed more to Apple’s bond issues in the past decade than any other investment bank, worth about $44 billion, according to the financial data provider Refinitiv.

Goldman Sachs also advised Apple on mergers and acquisitions recently two months ago, directing it through a $1 billion deal to acquire the majority of Intel’s smartphone modem business, according to Refinitiv.

Just last month, the two worked giants together to launch the company’s first credit card, the Apple Card.

Each bank formally separates its divisions in equity research and investment bank departments because of laws in the early 20th century aimed at protecting the independence of equity analysts from investment bankers, who often cover the same different companies on agendas.

Corporate clients typically respect the independence of the Research Division. When they don’t, it gets a lot of attention.

In May last year, Tesla CEO Elon Musk refused to answer analysts’ questions about the company’s capital requirements, describing the questions posed by the company as “boring” and “not cool” during a conference to discuss Tesla’s performance.

At the start of its fiscal year, Apple changed the values of its free services – such as Apple Maps – and transferred them to its services sector. This was previously under individual products.

In the note, Goldman Sachs said that Apple is likely to treat TV + subscriptions in a similar way, by accounting as a discounted package of free service associated with the purchase of hardware. Hall said that would lead to Apple investors see lower selling prices of iPhones and other Apple devices but faster growth in the company’s services sector.

Many Apple investors have come to focus on growth in the service sector as the global smartphone market stagnates, with Apple shares rising this year despite a decline in iPhone sales over a year.