Earnings reports


Apple reports fourth straight fall in quarterly revenue in its greater China market

But world’s most-valuable tech company recaptures top global ranking in smartphone shipments in the quarter to December

PUBLISHED : Wednesday, 01 February, 2017, 6:00pm
UPDATED : Wednesday, 01 February, 2017, 10:09pm

Apple has posted its fourth consecutive quarterly revenue decline at its greater China business, as sales were challenged by the strong US dollar and stiff competition in the smartphone market.

The world’s most-valuable technology company announced a 12 per cent decrease in combined revenue from the mainland, Hong Kong and Taiwan in the quarter ended December 31 to US$16.23 billion, down from the record-high of US$18.37 billion in the same period in 2015.

That marked the sole blemish on an otherwise blockbuster quarter for the company, which reported a better-than-expected 3 per cent increase in global revenue to US$78.35 billion from US$75.87 billion a year earlier, on Tuesday after the close of the US markets.

“Our Greater China revenue was down 12 per cent [last quarter], and about four points of that was currency related,” Apple chief executive Tim Cook told analysts in a conference call.

Cook, however, maintained that the latest quarterly earnings for the company’s second biggest geographic market represented “a significantly better performance on every way you look at it versus what we had experienced the prior three quarters”.

“What we’ve seen is that iPhone 7 was the best-selling smartphone in China during the quarter, according to [research firm] Kantar,” he said. “[On] Singles’ Day, which is a huge day in China, as you know, we were the most popular US brand on Alibaba.”

According to Counterpoint Technology, Apple was the mainland’s fourth-largest smartphone supplier in the December quarter, with a 12.2 per cent market share behind Chinese Android brands Oppo, Huawei Technologies and Vivo.

Apple has a loyal fan base in China who were due for an upgrade ... That also contributed to Apple’s numbers in China
Tay Xiaohan, senior market analyst at IDC, who said the black version of the iPhone 7 and 7 Plus models, introduced in September, showed strong demand among mainland consumers

IDC senior market analyst Tay Xiaohan told the South China Morning Post that the black version of the iPhone 7 and 7 Plus models, which were introduced in September, showed strong demand among consumers on the mainland last quarter.

“Apple has a loyal fan base in China who were due for an upgrade ... That also contributed to Apple’s numbers in China,” Tay said.

She confirmed that e-commerce giant Alibaba Group’s online shopping promotion for Singles’ Day on November 11 “helped create a lot of hype during that period to push sales of both the iPhone 7 and 7 Plus, as well as the older iPhone models, in the market”. New York-listed Alibaba owns the Post.

Cook pointed out that Apple also set a new record for its services business in the mainland, without disclosing figures.

“Mac [desktop personal computer] revenue was up double digits year over year. iPad units were also up double digits, which was obviously different from the trend that we saw in the rest of the world,” Cook said.

“We also saw 50 per cent of our iPhone sales in China were to switchers and first-time buyers ... And obviously, our total installed base continues to grow there in the strong double digits,” he added.

Neil Mawston, executive director at Strategy Analytics, said on Wednesday that Apple shipped 78.3 million iPhones worldwide last quarter to recapture the top ranking in global smartphone shipments, with an 18 per cent market share.

A record 1.5 billion smartphones were shipped last year, from 1.4 billion in 2015, according to Strategy Analytics.