Apple revenue falls in Greater China region

Apple Inc’s revenue from the Greater China region fell 33 percent year over year as the tech giant reported earnings for its fiscal third quarter on Tuesday.

The Cupertino, California company posted quarterly revenue of $42.4 billion and net income of $7.8 billion, or $1.42 per diluted share, compared with revenue of $49.6 billion and net income of $10.7 billion, or $1.85 per diluted share, in the year-ago period.

Still, Apple surpassed Wall Street expectations. The EPS of $1.42 was 12 cents better than estimates, and that likely helped shares surge in after-hours trading on the Nasdaq Stock Market, where they were up $6.78, or 7 percent, to $103.45, at 5:30 pm ET. The stock had closed down 67 cents in the regular session.

Revenue in Greater China was $8.85 billion, compared with $13.2 billion in the 2015 quarter. Revenue fell 29 percent from the second quarter of 2016, when it came in at $12.49 billion.

Sales of iPhones in the China region were down 7 percent, according to Barron’s.

Apple is facing heavy competition from Chinese smartphone makers, which include giant Huawei Technologies Co Ltd, Xiaomi Inc, OPPO Electronics Corp and newcomer Vivo.

Huawei shipped 25 percent more smartphones in the first half of 2016, to 61 million units, the company reported on Tuesday, and registered a 41 percent increase in its consumer business.

Shenzhen-based Huawei shipped 108 million phones in 2015, and ranks No. 3 in the world in units shipped behind Apple and Samsung Electronics Co Ltd.

The less-expensive phones offered by Chinese manufacturers also are more popular than Apple’s pricier ones with a key segment of the domestic market: teenagers.

International sales accounted for 63 percent of Apple’s quarter’s revenue in the quarter.

“We are pleased to report third-quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” said CEO Tim Cook. “We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”

“Our Services business grew 19 percent year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record,” said Luca Maestri, Apple’s CFO, in a press release.

“We returned over $13 billion to investors through share repurchases and dividends, and we have now completed almost $177 billion of our $250 billion capital return program.”