Apple reports solid sales —but not in China

Apple Inc posted a strong earnings report overall on Tuesday but continues to see its sales trail in China.

Apple’s earnings climbed 12 percent to $8.7 billion, and revenue increased 7 percent from last year to $45.4 billion. The fiscal third-quarter results exceeded analysts’ projections for the period covering April to July 1.

The company’s net income rose to $8.72 billion, or $1.67 per share, from $7.80 billion, or $1.42 per share, a year earlier.

But Apple’s revenue from the Greater China region fell 9.5 percent to $8 billion, as consumers switched to newer domestic phone offerings.

Chief Financial Officer Luca Maestri said Chinese mainland revenue was flat, as were iPhone sales on the mainland. Sales of other Apple products rose on the mainland and also were up in Taiwan.

The services segment was a bright spot, recording doubledigit revenue growth in Greater China from January to March.

“The decline from a market standpoint was concentrated in Hong Kong, which is a place that has been really affected by a reduction in tourism because the Hong Kong dollar is pegged to the US dollar,” Maestri said.

The iPhone’s share of China’s smartphone shipments fell to 9 percent from January to June, from a peak of 14 percent in 2015, according to consultancy Counterpoint.

Apple has several Chinese smartphone competitors, such as Huawei Technologies Co Ltd, Xiaomi Inc, OPPO Electronics Corp and Vivo, which have steadily built market share.

Apple is expected to unveil its 10th anniversary iPhone later this year, considered crucial to winning back Chinese buyers.

“Because others have eaten away at Apple’s market share in China, it now has to pay more attention to regulation from government,” said Beijing-based tech analyst Li Chengdong. “China is such a key market for Apple that it has to listen.”

The stock was up $9 a share, or 6 percent, to $159.10 in afterhours trading.