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Apple steels for more pain after 27% slump in China last quarter

Cook describes emerging markets as 'significantly more severe' than expected

Apple's sales in China declined in the quarter to December as consumers shunned high-priced iPhones.   © Reuters

PALO ALTO, U.S. -- Apple is digging in for a longer sales slump after weak Chinese iPhone demand led to a 5% decline for October-December, the first drop in nine quarters.

The U.S. company on Tuesday said its sales for the last quarter of 2018 came to $84.31 billion. A big reason was that sales in greater China -- including the mainland, Hong Kong and Taiwan -- plunged 27% on the year to $13.17 billion. It was the first downturn there in six quarters.

Sales in other regions, including the U.S., Europe and Japan, rose 1% on the year to $71.1 billion.

"Weak macro conditions in some emerging markets was significantly more severe than we originally foresaw, especially in greater China," Apple CEO Tim Cook told analysts, confirming lackluster smartphone sales in China. "That challenge was compounded by quarterly iPhone upgrades that were lower than we anticipated."

Greater China dragged down the company's overall earnings, and the region's share as a percentage of Apple's total sales shrank to 16% from 20%.

The same day, Apple said it expects sales for the January-March period to fall 3% to 10%, to $55 billion to $59 billion.

The iPhone woes complicate Apple's strategy of boosting sales through music streaming and other services for users of its handsets. Research company Canalys estimates iPhones sales in the last quarter declined 7% on the year to 71.7 million units.

The fall slightly outpaced the 6% decline in the overall smartphone market, as Chinese manufacturers Huawei Technologies and Oppo gained market share.

Apple's net profit for the October-December quarter fell 0.5% on the year to $19.96 billion, the first drop in eight quarters. Research and development expenses also pressured the bottom line.

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