Greater China In Focus As Apple Reports Fiscal Q1 Results

by Trefis Team
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Apple (NASDAQ:AAPL) is expected to publish its Q1 FY’19 results on January 29, reporting on a quarter that saw the company experience headwinds in the Chinese market, amid weak sales of its latest iPhones, forcing it to reduce its revenue guidance in a rare move. We will be looking for further updates on the iPhone business and the company’s outlook in China when it publishes earnings Tuesday.

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What We Will Be Watching

Apple has projected revenue of $84 billion for the holiday quarter, marking a decline of about 5% from the year-ago period. The company has indicated that much of the shortfall comes from slowing iPhone sales in Greater China, where it has been steadily losing smartphone market share. While smartphone shipments in China have been on the decline, Apple has been more severely impacted on account of the ongoing trade tensions with the United States and an increasing preference among Chinese customers for lower-priced, but well-specced local handsets from the likes of Huawei and Oppo. Moreover, the company’s mid-range iPhone XR, which it was counting on to drive sales, doesn’t appear to be faring as well as expected among image-conscious Chinese users. Apple has reportedly dropped pricing for the device for retailers as it looks to drive sales, and the company has also been promoting a trade-in program that provides existing iPhone users with better than market value for their used devices. Apple’s sales in Greater China stood at about $18 billion in Q1 FY’18, and we will be looking at how the number trends over this holiday quarter.

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