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Apple Revenue and Shares Rise
Apple's recent earnings report seems to prove that though China is a significant market, the company can succeed without it. $AAPL shares opened on Wednesday, August 2nd, 5% higher as the company's Q3 earnings and revenue exceeded expectations. That came despite its Q3 revenues in the region of Greater China slumping by 10% from the same quarter the previous year.
Revenue in the region totaled only $8 billion in Q3 which was significantly below the Zacks $9.36 billion estimate. Had Apple's Q3 China earnings touched that figure, it would have reflected a nearly 6% growth. While this highlights the struggles faced by the company in China, its overall revenue and earnings in the third quarter comfortably exceeded expectations. It's an indication that performance in China does nothing to affect the company's bottom-line.
Why It's Tough in China
It helps to get a bit of a historical perspective into the presence of Apple in China. When Apple initially entered the Chinese market many years ago with its iPhones, it targeted the country's booming middle class. The country became the company's major growth driver.
But then, the local competition caught up. Its expensive iPhones came under threat from Chinese manufacturers such as Vivo and Oppo who started growing at an amazing pace. They launched devices similar to the more expensive iPhones, but at much more affordable prices, and Chinese consumers fell for these brands. In 2016, Oppo registered 122% growth in sales of its smartphones in China. Its market share has doubled to 16.8%. By contrast, Apple's Chinese market share reduced by up to 10% as 2016 ended. Chinese governmental regulations have also lately been favoring domestic manufacturers more.
Apple Looking to India and Other Asia Pacific Markets
In spite of these unfavorable circumstances in the crucial Chinese market, Apple's revenue has exceeded expectations and the company issued Q4 guidance exceeding consensus estimates. That's partly because Apple manages to shift its focus to other emerging growth markets. One such destination is India. Apple CEO Tim Cook has highlighted the importance of the investments made in India such as the app accelerator center that was recently launched, and the production of iPhone SE in the country.
Sales for Apple in the "rest of Asia Pacific" region experienced 15% year-over-year rise to $2.72 billion. Cook also expressed his optimism over India. The optimism is essential since these emerging Asian markets could be crucial to the success of the tech giant, now that China is no longer the favored hunting ground.
Watch this space, as Apple looks to shake off its China experience by establishing itself in the other Asia Pacific markets. Build up your experience in trading and analysis meanwhile with free commission stock trading from TradeZero. Give us a call at +1 954-944-3885 or email support@tradezero.co.
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