How a soft Chinese market is affecting Apple’s sales.
Apple Inc reported lower-than-expected iPhone sales in the latest quarter, its slowest-ever growth in shipments, and forecast sales below Wall Street’s estimates for the current quarter as the company began to feel the effects of economic softness in the Chinese market.
Apple said on Tuesday (US time) it sold 74.8 million iPhones in its fiscal first quarter, ended December 26, the first full quarter of sales of the iPhone 6S and 6S Plus. The 0.4% growth in shipments was the lowest since the product was launched in 2007.
According to Apple chief financial officer Luca Maestri, while revenue in Greater China rose 14% in the quarter, Apple is beginning to see a shift in the economy.
“As we move into the March quarter it’s becoming more apparent that there are some signs of economic softness,” Maestri said. “We are starting to see something that we have not seen before.”
This comes amidst the background that analysts have long feared that Apple’s sales in China, one of its top two markets, would falter amid a broad economic slowdown.
Apple forecast second-quarter revenue of $US50 billion ($71.4 billion) to $US53 billion, below analysts’ average forecast of $US55.6 billion.
The company reported revenue of $US18.37 billion from Greater China, accounting for 24.2% of total revenue. Revenue from the region had nearly doubled in the fourth quarter.
Apple’s iPhone shipments fell short of analyst expectations for 75.5 million, according to research firm FactSet StreetAccount.
The company’s first-quarter net profit rose to $US18.36 billion from $US18.02 billion, while revenue increased 1.7% to $US75.87 billion, both records for the company.
The rise in iPhone shipments in the critical holiday shopping quarter was the smallest since the second fiscal quarter of 2013, when they rose 6.8%, according to data company Statista.
Maestri attributed the lacklustre revenue to foreign exchange headwinds caused by the strong US dollar, which he said knocked about $US5 billion off the company’s revenue.
Revenue rose 1.7% to $US75.87 billion. On an adjusted basis, Apple said revenue was $US80.8 billion.
This story first appeared in Appliance Retailer.