Apple Chief Financial Officer Luca Maestri disputed investor concerns that sales in China would decline 8%, pointing to sales growth in other emerging markets.
“When you start looking at India, Saudi Arabia, Mexico, Turkey, Brazil… and Indonesia, the numbers are getting bigger and bigger, and we are very happy with these markets because we have a high market share.” [currenttly] “It’s low,” Maestri said Thursday during Apple’s second-quarter earnings conference.
China revenue fell to $16.37 billion in the second quarter
“The population is growing significantly and our products are really making great strides in these markets,” Maestri continued. “The level of excitement about the brand is very high.”
One thing that Maestri said is verifiable is that the populations of emerging markets are indeed large and growing. But available data suggests Apple’s growth in these regions isn’t as rosy a picture as the executive tried to paint.
Net sales in the Americas (which includes countries such as Brazil and Mexico) decreased slightly from $37.8 billion to $37.3 billion compared to the same period last year. Apple’s Q2 2024 Report. Revenue in the “rest of Asia Pacific” region, which includes emerging markets such as India and Vietnam, fell 17% from $8.1 billion in the second quarter of 2023 to $6.7 billion as of March 31.
To play devil’s advocate, Apple’s declining sales in these regions may have more to do with pricing than product hype.
Maestri noted that Apple has introduced several financing solutions and trade-in programs that “lower the barrier to affordability” to help customers purchase top-of-the-line products.
“This is very valuable for us in developed markets, but especially in emerging markets where affordability issues are more pronounced,” Maestri said.
Still, pointing to the silver lining of emerging markets may not be enough to calm investors. China is Apple’s third largest market, and domestic companies such as Oppo and Xiaomi dominate the market, making it a fiercely competitive battleground. According to Counterpoint Research, Huai has been experiencing major upheaval within the country since being completely ignored by US sanctions. The company’s mobile phone sales increased about 70% year-on-year, while Apple’s mobile phone sales fell 19%. In September 2023, the Chinese government imposed a ban on iPhone use for government officials in the workplace, echoing US actions against Huawei.
China and emerging markets aren’t the only areas hurting Apple’s balance sheet this quarter. The company also reported a 10% decline in iPhone sales across all markets. Apple’s slow adoption of AI compared to competitors such as Google and Microsoft could also potentially be contributing to the slowdown in iPhone sales.
Despite the lackluster hardware numbers, Apple still managed to beat Wall Street’s expectations. It also caused stock prices to rise. More than 10 After-hours trading was driven by higher services revenue and a massive $110 billion share buyback, up from $90 billion last year.
Investors on the call sought to get Maestri and Apple CEO Tim Cook to provide more details about the upcoming generative AI launch that Apple has hinted at in recent months. However, executives only revealed that an announcement was imminent.
Stay tuned to Apple’s Worldwide Developer Conference for more news.
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