Apple faces expansion challenges despite strong sales

The news on Tuesday was not particularly good for Apple: revenue was flat, profit was lower and even iPad sales were down.

Investors did not seem to mind, at least in the short term, sending the company’s shares about 4 per cent higher in after-hours trading. Strong iPhone sales helped beat the expectations of Wall Street.

But Apple’s earnings report on Tuesday highlighted some of the challenges the company faces as it continues to expand overseas. The firm sells plenty of devices in the United States, but sales have lagged in some larger overseas markets, which are crucial for its future growth.

China has been especially problematic for the company. Overall sales of Apple devices in the country fell 4 per cent from the same quarter last year. And in Hong Kong, sales were down about 20 per cent – a trend that Tim Cook, the company’s chief executive, found puzzling.

“Hong Kong is an international shopping haven,” Cook said on the company’s earnings call. “We saw some dramatic downturn there. It’s not totally clear exactly why that occurred.”

Gaining a foothold in foreign markets is becoming increasingly vital for Apple. Its growth has slowed in the most recent quarters, as its devices have largely saturated the US and some top markets in Europe.