The Cupertino geek gear maker released its earnings late Monday showing a whopping 27% increase in top line growth, thanks in large part to their new iPhone models in China. But in China, Apple did even better than their overall revenue growth. Apple's top line grew 71% in China compared to the first quarter.
"China was was the shining spot for Apple", says chief market analyst for AvaTrade International, Naeem Aslam. "The potential for Apple in China is still massive and China is the single most important market for Apple," Aslam says.
Within Apple's operating segments, only China revenue grew sequentially. Apple reported a 4% sequential change in revenue to $16.8 billion, making it the second biggest market after the United States. All other segments declined by double digits, with U.S. revenue down 30%. Year over year change in China was also greater in percentage terms than in all other markets.
Apple earnings beat analysts forecasts on all accounts. Revenue was a record breaking $58 billion dollars. They sold nearly 61.2 million units, a number which is easy to say but in reality in the face of slowing global growth and consumer spending, this number is stellar, notes Aslam.
Emerging market sales were also up, increasing nearly 58% on a quarterly basis.
The surprising news in the earnings data was that Apple does not have a strong margin in their iWatch. The watch, a hybrid phone and time piece, might one day lead the way to holographic communication. But for now, this costly piece of luxury -- priced at over 1,800 yuan on the low end -- is being sold near break even. Apple has raised concerns before about gross margins on the iWatch in the past.
Dan Matthews argued on FORBES on March 11 that the iWatch would not be a big seller anytime soon.
Meanwhile, there is China. Price seems to have no impact.
"People love Apple in China. It is literally like it is the only product on the market," Aslam says.
Apple beat Xiaomi handsets earlier this year in terms of market share, making it No. 1 for a short period of time.
Apple shares are up 2.26% in the pre-market, meaning it is now priced at an all time high of $135.57 per share. The stock is up like a Chinese equity in fact. In the last five years, Apple shares have skyrocketed more than 220% thanks to its continual release of new smartphone models and China's unending appetite for iconic American devices.
