Apple beats Wall Street, investors wary of China sales

Tue Oct 27, 2015 7:16pm EDT
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By Julia Love and Devika Krishna Kumar

SAN FRANCISCO (Reuters) - Apple Inc (AAPL.O: Quote) painted a rosy picture for its new iPhones on Tuesday, but a sequential slowdown of overall sales in China cast doubt on the strength of its business in the world's most important market for smartphones.

Shares of the world's most profitable company initially rose after hours as Apple beat Wall Street's sales and profit forecasts, but gave up those gains later as concerns crept in.

Apple's quarterly sales in Greater China nearly doubled from a year ago to $12.52 billion, accounting for nearly a fourth of its total revenue.

"We continue to have wonderful success there," Chief Financial Officer Luca Maestri told Reuters, adding that Apple now has 25 stores in China and is opening a new one roughly every month.

But investors worried that China sales dipped from the quarter immediately before it, when Apple notched $13.2 billion in revenue there. The sequential decline is important as many analysts believe China is poised to replace the United States as Apple's biggest market.

The world's largest company by market value said it sold about 48.05 million iPhones worldwide in its fiscal fourth quarter, slightly below analysts' average forecast of 48.72 million, according to a poll by Fortune magazine.

For the current quarter, which will include a full three months of sales of the new iPhone 6s and 6s Plus models, Apple forecast revenue between $75.5 billion and $77.5 billion. The company's generally conservative forecast was in line with Wall Street's average estimate of $77.17 billion, according to Thomson Reuters I/B/E/S.

"The street was fearing soft guidance and instead got a good December outlook," said Daniel Ives, an analyst at FBR Capital Markets.   Continued...

Employees work at the SoHo Apple Store in New York, October 27, 2015.  REUTERS/Brendan McDermid