Apple shares hit as falling China sales give analysts a "headache"

(Alliance News) - Apple Inc shares have taken a hit in pre-market trade on Friday, after analysts anxiously unpick the company's quarterly sales figures.

"About a decade ago, after the initial iPhone and iPad-driven surge had started to wear off, people started to argue the days of Apple being considered a growth stock were over. The shares dropped below USD15 and the-then recently appointed CEO Tim Cook was under pressure," said AJ Bell investment director Russ Mould.

"Today the shares trade at more than 10 times that level, but its growth credentials are under the microscope once again as its sales drop for a fourth straight quarter, the longest slide in more than two decades."

Shares in Apple fell 3.1% in pre-market trade after closing up 2.1% at USD177.57 in New York on Thursday. Over the past 12 months, the stock is down 28%.

The Cupertino, California-based firm reported a fourth consecutive quarterly drop in revenue, with revenue in its final quarter down 0.7% to USD89.50 billion from USD90.15 billion the year before. The company's financial year runs to September 30.

However, net income rose 11% to USD22.96 billion from USD20.72 billion. Basic earnings per share rose to USD1.47 from USD1.29.

iPhone sales climbed to USD43.81 billion from USD42.67 billion the year before, while services sales jumped to USD22.31 billion from USD19.19 billion.

"Today Apple is pleased to report a September quarter revenue record for iPhone and an all-time revenue record in Services," said Tim Cook, Apple's chief executive. "We now have our strongest lineup of products ever heading into the holiday season, including the iPhone 15 lineup and our first carbon neutral Apple Watch models, a major milestone in our efforts to make all Apple products carbon neutral by 2030."

Whilst Cook remained positive, market attention was on sales dropping in China. In China sales fell to USD15.08 billion in the quarter, down 2.5% from USD15.47 billion a year earlier.

Ipek Ozkardeskaya, Swissquote Bank, called the demand in China "sluggish", and blamed it for denting revenue.

AJ Bell's Mould said: "Chinese sales were markedly below expectations and the political risks in that market are undoubtedly becoming more of a headache for Apple."

In recent months, there have been reports of significant Chinese restrictions on iPhones at government offices and state-backed entities. The tech giant first established a presence in China in 1993.

As well as restrictions from regulation, Apple has also faced some stiffer competition from local competitors such as Huawei.

Looking ahead, Apple's outlook has also presented a concern to investors.

"Apple has sounded the alarm over Christmas demand, in what could be taken as a sign of creaking consumer resilience," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

"Convincing people to upgrade a loftily-priced iPhone at a time of year that's already tough on wallets in the current climate, just became a much harder task indeed."

By Sophie Rose, Alliance News senior reporter

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