Apple earnings lifted by 71% sales rise in China

Updated: 2015-05-02 01:57

By JACK FREIFELDER in New York(China Daily USA)

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Apple's performance in the Greater China region bolstered the tech giant's second-quarter earnings.

On Monday, Apple reported net income of $13.6 billion on revenue of $58 billion in the quarter ended March 28 — year-over-year gains of 33.3 percent and 27.2 percent, respectively.

Most of Apple's revenue came from the Americas, where it reported $21.3 billion in sales. But a growing portion of that total, $16.8 billion, came from sales on the Chinese mainland, Hong Kong and Taiwan.

The Cupertino, California-based company reported earnings per share of $2.33, up from $1.66 a year ago. It sold 61.2 million iPhones, beating estimates of 58.1 million.

Revenue from China rose 71 percent year over year, compared with an overall revenue gain of 27 percent.

Apple shares closed at $132.65 in Nasdaq trading on Monday, up $2.37, or 1.8 percent. After hours, the stock moved up $1.70 to $134.55.

Luca Maestri, Apple's chief financial officer, said the company achieved an "all-time quarterly record" for revenue growth in China despite foreign-exchange headwinds that will continue into the foreseeable future, as the US dollar has strengthened.

"We're seeing great results all over the world," Maestri said, adding that iPhone sales grew 72 percent in China, where the company has big hopes for expansion.

Chief Executive Officer Tim Cook told analysts on a conference call that Apple's report shows "fantastic results" for the iPhone, with a "high rate of switchers" from handsets that run on Google's Android software.

Cook has said he's optimistic about new markets such as China, where the company has made a strong showing against South Korea's Samsung and China's Xiaomi.

Maestri also stressed the potential for new products like Apple Watch and Apple Pay, the company's mobile-payment service.

While Apple doesn't break down shipments by country, data from Creative Strategies LLC in San Jose, California, show that Apple may have sold between 18 million and 20 million iPhones in Greater China during the quarter.

US deliveries for the same period totaled ranged from 14 million to 15 million, the company said.

"Our big question is what happens in China for the next few quarters?" said Ben Bajarin, an analyst at Creative Strategies.

"Are they on par with the US ?" he asked. "At some point in time, it feels like it is inevitable that every quarter the iPhone in China will be bigger than in the US."

In October, Apple sold nearly 10 million iPhone 6 units in three days on JD.com.

Revenue from Mac computers rose 2 percent from a year earlier, to $5.6 billion, while iPad revenue fell 29 percent, to $5.4 billion — continuing a steady decline in tablet sales.

Sales of iPhones accounted for 69.4 percent of the company's revenue in the second quarter, up from 57 percent in the same quarter a year ago, company data showed.

Analysts had estimated EPS of $2.16 and revenue of $56 billion. Net income was projected at $12.6 billion.

During the year-ago quarter, the company posted a profit of $10.2 billion and revenue of $45.6 billion.

Cook said the company is off to an "exciting start" for its June quarter, with year-to-date shipments for the iPhone already surpassing 135 million units.

The Apple Watch started shipping to customers on April 24.

Available in the US, China and seven other countries, the watch is the first new hardware from Apple since the iPad in 2010.

Bloomberg and The Associated Press contributed to this story.

jackfreifelder@chinadailyusa.com

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