Apple’s business in China did not fall off a cliff

“For a quick overview of Apple’s June quarter, it generated $42.4 billion in revenue, which was down 14.6% year over year and a bit above the midpoint of revenue guidance of $41 to $43 billion,” Chuck Jones writes for Seeking Alpha. “Since Greater China’s revenue dropped by 33%, when you remove its impact, the other four geos revenue decreased by 8%.”

“Additionally, when you take into account the $3.6 billion channel inventory reduction in the June quarter and about $500 million last year, the revenue decline would also have been 8% for the whole company. So when you remove Greater China’s revenue decline, the Rest of the World’s revenue increased 0.6% year over year,” Jones writes. “So in one aspect (yes, it is a slice-and-dice analysis, but still worthwhile), Apple actually saw its revenue increase.”

“Greater China generated $8.8 billion in revenue, the lowest since the September 2014 quarter, and fell to the third largest geographic segment for the company since the December 2014 quarter. Its revenue decline of 33% year over year accelerated from 26% in the March quarter,” Jones writes. “However, management said, by far, the largest portion of the channel inventory reduction was in this region. If you assume $2.5 billion of the $3.6 billion was from here, the revenue decline would have only been 14%.”

Much more in the full article – recommended – here.

MacDailyNews Take: The doom and gloom over Apple’s China business is overwrought.

During the past quarter I visited China and India, and I am very encouraged about our growth prospects in those countries. We remain very optimistic about the long-term opportunities in Greater China and we continue to invest there. We opened our 41st Greater China retail store during the quarter, and we also made a $1 billion investment in Didi Chuxing.

Switchers and first-time smartphone buyers represented the lion’s share of our iPhone sales in the quarter, and our installed base of iPhones in China has grown by 34% over the last year alone. According to China Mobile, there are more iPhones on their network than any other brand, with iPhone users ranking first in terms of customer loyalty, data usage and ARPU. By far, the largest portion of our global channel inventory reduction was in Greater China, so our underlying business there is stronger than our results imply. — Apple CEO Tim Cook, July 26, 2016


  1. Who are they trying to kid? Apple is being crushed. Alphabet is going to blow right by Apple in market cap. Tim Cook has simply given Apple’s crown to Alphabet without putting up a fight. All of Apple’s profits and revenue are useless now that Android OS has severely crippled Apple’s iPhone business. Steve was going to go thermonuclear against Google and Android and nothing came of it. Now Alphabet has unlimited growth and Apple is on a steep decline. All the Chinese consumers want are cheap Android handsets and there’s not going to be much left for Apple’s iPhone except the dregs of the Chinese smartphone market. Apple has already stepped over the cliff thanks to Android’s dominant position in every country.

    Apple should have gone after Alphabet’s search/ad business a few years back but now it’s too late. Alphabet has become much stronger and Apple is much weaker. The people running Alphabet are clearly smarter than those people running Apple. Tim Cook doesn’t have an ounce of aggression and Apple shareholders will pay the price for that.

    1. Zunetang? Is that you? No? Keep working on your material. It’s not quite up to Zunetang level support for Google. Maybe mention the massive profit loss Apple had last quarter, talk about the luck of customer loyalty, maybe how well Windows phones… I mean android phones are raising manufacturer profits. Maybe how Stwve Ballmer likes Google’s strategy. How he likes it a lot.

    2. Snap out of it, man! Real investors don’t wring their hands and snivel like crippled beggars in the street. The stock market, like life, is unfair and has its ups and downs.—Adapt to it, rather than suffer panic attacks. Think of it as the ocean, swelling and then placid, reflecting the totality of nature, sheltering its inhabitants for the most part but also harbouring dangerous denizens who want to eat you.

      If you think of yourself as a jellyfish, you may be able to spare yourself the trauma of the rip currents, and ourself the injury of extreme eye-rolling.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.