Apple has laid bare the extent of the Chinese slowdown on its sales, saying its revenue in the country crashed a colossal $4.8 billion in the past quarter compared to the same period last year, with declines across iPhone, Mac and iPad.
In a conference call with analysts, CEO Tim Cook was understandably keen to emphasise the upside for the company however, pointing to record quarterly Apple services revenue in Greater China – now home to 2.5 million registered iOS developers.
“We [also] had record performance in large markets, including the United States, Canada, Mexico, Germany, Italy, Spain and Korea” he added.
(Overall Apple posted quarterly revenue of $84.3 billion for its Q1 of fiscal 2019, a decline of five percent from the year-ago quarter. iPhone revenue fell 15 percent. Total revenue from all other products and services grew 19 percent).
Full Disclosure: Apple Reveals Active iPhone Numbers for First Time
In a first for the company, it disclosed its global active installed base of iPhones for the first time: 900 million devices “live” globally, up 75 million this year. Overall active installed devices hit an all-time high of 1.4 billion.
“We are disclosing that number now for the first time” Tim Cook said, adding “We plan to provide information on the iPhone installed base as well as total installed base on a periodic basis. Customer satisfaction and loyalty for iPhone continue to be outstanding.”
“While it was disappointing to miss our revenue guidance, we manage Apple for the long term.”
The record number of installed devices is “driving our Services business to new records thanks to our large and fast-growing ecosystem” he added.
The comments come after Apple Services – which includes Apple Pay, Apple Music, and Apple Stores – had their best ever quarter in previous earnings, reaching an all-time high of $10 billion in revenue, up 27 percent from $7.9 billion in Q4 2018.
Amid what many analysts fear is market saturation, services are the natural next strategic revenue driver for Apple. It is taking full advantage of the opportunity: our revenue from services has grown from less than $8 billion in calendar 2010 to over $41 billion in calendar 2018.
Christopher Dembik, Head of Macro Analysis at Saxo Bank said: “Last night’s results beg the question, are investors falling out of love with Apple? The results of the former favourite stock – Apple was the fifth most traded stock by clients at Saxo Bank, behind Facebook, Amazon, Alibaba and Tesla – signalling a tough climate for traders right now with a gloomy global economy, weak returns across the board and whispers of another recession on the way. ”
He added: “We believe earnings growth will be back down in single digits at around 6% in the coming period, but it is still a honourable performance after years of very strong earnings… consumer staples stocks have held up best out of any sector during hard times… During the 1995 dot-com crash, the consumer staples sub-index was +28% in comparison to the S&P 500 which was -34%. Again, during the global financial crisis, the same sub-index was +6% versus -25% for the S&P 500.”