Sales fell 33% in Greater China
The United States continued to be Apple’s largest market, generating revenue of $18.0 billion in fiscal 3Q16. However, this was an 11% fall in revenue compared to fiscal 3Q15. Revenue from Europe fell 7% to $9.6 billion, whereas revenue from the Asia-Pacific region fell 20% to $2.4 billion in 2Q16. Revenue from Japan saw a significant rise of 23% to $3.5 billion.
China remains an important market for Apple
Falls in revenue from China (FXI) were driven by a sluggish Chinese economy coupled with the saturation of the smartphone market and the strong US dollar. In calendar 2016, China’s regulators banned some of Apple’s digital services such as iBooks and iTunes.
In June 2016, Chinese Intellectual Property Office ordered Apple (AAPL) to stop the sales of its iPhone 6 and iPhone 6 Plus models in China. The agency held Apple and its distributor and retailer, Zhongfu Telecom, responsible for the patent infringement of the China-based Baili Electronics.
Apple generates almost 60% of its revenue from non-US markets. Thus, falling revenues from China and other economies will pose a challenge to the firm.
It will be interesting to see the performance of other companies in the technology sector like Samsung (SSNLF) and Lenovo (LNVGY) and see how their revenues have been impacted by currency fluctuations and macroeconomic conditions.