Apple CEO Tim Cook optimistic on China despite 26% dip in revenue
Apple CEO Tim Cook on Tuesday reiterated a positive outlook on Greater China despite suffering a year-over-year revenue contraction during the second quarter of 2016, saying the region is "a lot more stable" than some perceive.
Apple revenue from Greater China, defined by the company as Taiwan, Hong Kong and mainland China, dipped to about $12.5 billion in the three-month period ending in March, down 26 percent year-over-year. By comparison, Apple's total quarterly revenue for the second fiscal quarter of 2016 fell 13 percent to $50.6 billion.
China is viewed as Apple's most important growth market, and until this quarter did not disappoint as a massive revenue generator. Over the preceding months, Greater China posted double-digit gains while more established markets like the U.S. and Europe saw only moderate growth. As noted by Piper Jaffray analyst Gene Munster, the region grew 14 percent to reach $18.4 billion in the most recent December quarter, which means today's earnings report is a sequential drop of 32 percent.
Despite what some call a weakening market, Cook remains optimistic on mainland China. During today's conference call, Cook said revenues there were down 11 percent year-over-year, which translates to about 7 percent in constant currency terms. Compared to the same time last year, when mainland China revenue grew a whopping 81 percent, Apple's most recent figures are down only 5 percent. Apple CFO Luca Maestri presented the same numbers earlier in the call.
In any case, Apple is moving ahead with an aggressive push into China and today announced plans to build at least five more brick-and-mortar Apple Store locations in the region by the end of quarter three. The company is on pace to meet its goal of building 25 new stores in China by the end of 2016.
For the recently ended quarter, Apple reported its first quarterly revenue decline in 13 years, largely due to a first-ever deceleration in iPhone sales.
Apple revenue from Greater China, defined by the company as Taiwan, Hong Kong and mainland China, dipped to about $12.5 billion in the three-month period ending in March, down 26 percent year-over-year. By comparison, Apple's total quarterly revenue for the second fiscal quarter of 2016 fell 13 percent to $50.6 billion.
China is viewed as Apple's most important growth market, and until this quarter did not disappoint as a massive revenue generator. Over the preceding months, Greater China posted double-digit gains while more established markets like the U.S. and Europe saw only moderate growth. As noted by Piper Jaffray analyst Gene Munster, the region grew 14 percent to reach $18.4 billion in the most recent December quarter, which means today's earnings report is a sequential drop of 32 percent.
Despite what some call a weakening market, Cook remains optimistic on mainland China. During today's conference call, Cook said revenues there were down 11 percent year-over-year, which translates to about 7 percent in constant currency terms. Compared to the same time last year, when mainland China revenue grew a whopping 81 percent, Apple's most recent figures are down only 5 percent. Apple CFO Luca Maestri presented the same numbers earlier in the call.
In any case, Apple is moving ahead with an aggressive push into China and today announced plans to build at least five more brick-and-mortar Apple Store locations in the region by the end of quarter three. The company is on pace to meet its goal of building 25 new stores in China by the end of 2016.
For the recently ended quarter, Apple reported its first quarterly revenue decline in 13 years, largely due to a first-ever deceleration in iPhone sales.
Comments
This basically explains a lot of the difference in revenues in Q2.
I think the real decline was Q1 if they had the same release schedule as last year and then Q2 would have been flat.
Last year Q2 and Q3 came in way way above expectations which kind of messes up this year's comparison.
it's good to know that it all can be arbitraged by those in-the-know (like Apple perhaps, with their buyback
initiative), right? Or those who buy on the "tick" and sell on the "tock"...
So, non-twitch-fiber long-termers, average it all out using your own choice of smoothing functions ...
Even in a "replacement" market like that of auto companies, etc., does Apple deserve a sub-market fwd P/E only half
of that of amazing growth companies (yeah, right) like Clorox, or Campbell Soup, or Proctor & Gamble, or Walmart,
or Heinz Ketchup (er Kraft Heinz now).
Oops, sorry, according to W. Buffett, those are really "wide-moat" companies with absolutely no competition (for bleach,
chicken soup, laundry detergent, mall shopping, or tomato sauce). Again, yeah right, basically because these outfits grow
about the same rate now as the general population, like about 2% per annum. Seriously, it's ridiculous they don't
have competition, as if one can't buy Hunt's catsup instead of Heinz, or Pepsi vs. Coke, etc.
Message to Apple -- smooth that cyclicality out, or just admit that consumers buy stuff around holidays (Occidental or Oriental).
Message to Wall St. -- perhaps, just maybe, that AAPL is a consumer-brand company, not a mere commodity "hardware" company...
From a -20% to +18.7%. Didn't happen.
Apple actually gained market share in Mainland China....Samsung falls to #4 spot
“I view India as where China was maybe seven to ten years ago from that point of view, and I think there’s a really great opportunity there.”
Because this year is not like the others and this is all the analysis understand. They listen to Sesame Street too much when they were growing up and did very well at recognizing what item was not like the others.