Tech

Apple booked $13 billion in revenue from China last quarter, down 27% from a year ago

Key Points
  • Apple reported revenue from China in its first quarter 2019 earnings report Tuesday.
  • Apple cited weak economic conditions in China as a reason for its lowered guidance for its first quarter 2019 in its warning to investors earlier this month.
  • The company has also faced legal challenges in China due to an ongoing battle with Qualcomm.
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Apple's revenue in China came in at $13.17 billion during the December quarter, a drop of nearly $5 billion from a year ago, when Apple reported $17.96 billion in China revenue. Apple's revenue is typically highest during this quarter, the first of its fiscal year.

Apple saw a similar slowdown between the December 2015 and December 2016 quarters, when China revenue fell 12 percent.

Apple's revenue in China was $11.41 billion during the September quarter, Q4 of its 2018 fiscal year. Revenue was also down slightly from last year in Europe and Japan.

In an interview following the report, CEO Tim Cook told CNBC, "As we got into January, things have improved...from where they ended in December and that gives us some optimism. Of course you don't know what will continue but I would also point out that seems to map to trade tension as well, that there is a bit more optimism in the air in January, or certainly I feel that anyways. I'm encouraged by the comments coming out of both countries."

Investors had feared slowing sales in China since CEO Tim Cook warned earlier this month of economic pressures in the region that led the company to lower its guidance for the quarter. In addition to weak iPhone sales, Cook blamed trade tensions between the U.S. and China for the slowdown in sales.

"If you look at our results, our shortfall is over 100 percent from iPhone and it's primarily in greater China," Cook told CNBC's Josh Lipton in an interview following the Apple's revised guidance announcement. "It's clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy."

Cook indicated earlier this month he believed the situation in China would be on the upswing. In an interview with CNBC's Jim Cramer, Cook said he is "optimistic" the U.S. and China would reach a new trade agreement.

"That clearly will be good not only for us, frankly, but I think more about the world in general. The world needs a strong U.S. and China economy for the world economy to be strong," Cook said.

Apple has also faces legal challenges in China, where a court granted Qualcomm an injunction against the company in December over alleged patent violations. Qualcomm claimed at the time the injunction banned the import and sale of nearly all iPhone models in China, but Apple quickly disputed the scope of the ban, saying it only covers iPhones that run on an older operating system.

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