Apple: Pay attention to emerging markets, not falling sales in China

Apple CFO Luca Maestri allayed investor concerns about an 8% revenue decline in China, noting that sales in other emerging markets are rising.

“When we start looking at places like India, Saudi Arabia, Mexico, Turkey, Brazil… and Indonesia, the numbers get bigger and bigger and we are very happy because these are markets where our market share is (currently) low” – Maestri said Thursday during Apple’s second-quarter earnings call.

Revenue in China fell to $16.37 billion in the second quarter

“Populations are large and growing, and our products are really making great progress in these markets,” Maestri continued. “The level of interest in the brand is very high.”

One thing, Maestri says, might be verified: Populations in emerging markets are in fact large and growing. However, available data shows that Apple’s growth in these regions is not as rosy as the manager tried to paint.

Net sales in the Americas – which incorporates places like Brazil and Mexico – fell barely year-over-year from $37.8 billion to $37.3 billion, the info showed. Apple Q2 2024 Report. Sales in the “rest of Asia-Pacific,” which incorporates emerging markets corresponding to 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 can 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 affordability threshold” in order that customers should purchase high-end products.

“This is very valuable to us in developed markets, but especially in emerging markets where affordability issues are more pronounced,” Maestri said.

However, pointing to a glimmer of hope in emerging markets may not be enough to reassure investors. China is Apple’s third-largest market and has grow to be a battleground for fierce competition with dominant domestic firms corresponding to Oppo and Xiaomi. According to counterpoint researchHuwaei has seen a sea change in the country after being completely sidelined by US sanctions. The company’s phone sales were up nearly 70% from a 12 months earlier, while Apple’s sales were down 19%. In September 2023, Beijing imposed a ban on using iPhones for presidency officials in the workplace, echoing U.S. actions against Huawei.

China and emerging markets weren’t the one declines in Apple’s balance sheet this quarter. The company also saw a ten% decline in iPhone sales across all markets. Apple’s slow adoption of artificial intelligence compared to competitors like Google and Microsoft also potentially played a job in slowing iPhone sales.

Despite unimpressive hardware numbers, Apple managed to beat Wall Street expectations. He also called for a rise in the corporate’s shares greater than 10% in after-hours trading, driven by each growth in service revenues and large $110 billion in share repurchases, a jump from last 12 months’s $90 billion purchase.

Investors on the decision tried to get Maestri and Apple CEO Tim Cook to reveal additional details concerning the upcoming generative artificial intelligence launches that Apple has been teasing over the past few months, however the executives only revealed that announcements were imminent.

We’ll be following Apple’s Global Developer Conference closely for more news.