Apple’s China revenue drops sharply in record-breakingly poor earnings

Analysts expected that when Apple announced its quarterly earnings this morning, it would be the company’s worst quarter in more than a decade. Now, the results are in, and they’re not pretty. iPhone sales have dropped year-on-year for the first time ever, and revenue dropped for the first time in a decade. And China, which has often been the engine of growth Apple can lean on in the lean times, saw a big drop, too.

Apple says that its revenue from the greater China area (China, Hong Kong, Macau, and Taiwan) this quarter totaled US$12.49 billion. That number is down 26 percent year-on-year, and 32 percent compared to last quarter.

In the earnings call, Apple VP Luca Maestri stressed that Apple’s record-breaking China Q2 last year, in which the company grew 82 percent, is very difficult to live up to.

Here’s the global picture:

As you see, the rest of Asia didn’t fare much better. The company did chart a 24 percent year-on-year revenue increase in Japan – the only region where Apple’s revenues grew year-on-year – and in the earnings call, Tim Cook said that iPhone sales in India climbed 56 percent year-on-year. But those gains were mostly offset by the rest of Asia, where revenue slumped 25 percent.

Apple’s total sales came in at US$50.4 billion – nothing to sneeze at, but lower than analysts had projected. And its forecasts for next quarter look even worse, with the American tech giant expecting between US$41-43 billion in revenue.

In the earnings release, Apple CEO Tim Cook praised his team’s performance “in the face of strong macroeconomic headwinds,” and emphasized the grown in Apple’s services offerings, which were up 20 percent year-on-year. Services are considered an especially important sector for Apple, because if the market for iDevices is as saturated as this quarter’s results suggest, Apple will need to find more ways of monetizing its existing users through services like iCloud and Apple Pay.