Apple Says TV Plus Pricing Wont Have a Negative Effect on Profits, Rebutting a Goldman Analyst

 fortune.com  09/13/2019 21:36:25 

Apple said a new video service wont have a material impact on its financial results, seeking to counter research from a Goldman Sachs analyst who cut his share price target on concern that aggressive pricing of the TV+ offering will trim profit.

Earlier this week, Apple outlineda strategy that involved lower priceson several devices and services, including a monthly cost of $4.99 for TV+. It will also be free for one year with purchases of new Apple devices. This is relatively rare for a company that has historically charged premium prices to support healthy profit margins.

Rod Hall, the Goldman Sachs analyst who covers Apple,cut his price target on Apple sharesto $165 from $187, saying the companys plan to offer a trial period for TV+ was likely to have a material negative impact on average selling prices and earnings per share.

We do not expect the introduction of Apple TV+, including the accounting treatment for the service, to have a material impact on our financial results, Apple said in an email.

The stock jumped after the statement, trimming losses from earlier in the day. It traded down 1.8% at $219 at 2:56 p.m. in New York.

The TV+ service is entering a crowded video-streaming field that already includes Netflix, Amazon, Hulu, and AT&Ts HBO. In November, Walt Disney Co. plans to launch a Disney+ streaming service, with a giant catalog of titles, for $6.99 a month. Netflixs entry-level subscription is $8.99 a month in the U.S.

Apple, which doesnt currently have a back catalog of content for TV+, announced the $4.99-a-month pricing on Tuesday, sparking a rally in its shares and declines in Netflix and Disney stock.In India, the TV+ service will be 99 rupees ($1.40) a month.

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