Apple begins to see signs of 'softness' in China

Apple began to see "some signs of economic softness" in its Greater China region earlier this month, according to CEO Tim Cook.

Despite boasting the company's "best results ever" in the region (which also includes Taiwan and Hong Kong), Cook acknowledged "the turbulent environment." The signs of softness, he said, have most notably been seen in the Hong Kong area.

"Beyond the short-term volatility, we remain very confident about the long-term potential about the China market and the large opportunities ahead of us, and we are maintaining our investment plans," Cook said.

Revenue in the region grew 14 per cent over the prior year, 47 per cent sequentially, and 17 per cent year-over-year in constant currency, Cook said, adding that those results "were fueled by our highest ever quarterly iPhone sales and record App Store performance."

In fact, later in the company's earnings call, Cook said Apple remains "very bullish on China" and does not "subscribe to the doom and gloom kind of predictions."

When global attentions focused on China over the summer amid massive volatility in its markets, Apple CEO Tim Cook told CNBC that the company had "continued to experience strong growth for our business in China through July and August."

"I continue to believe that China represents an unprecedented opportunity over the long term as LTE penetration is very low and most importantly the growth of the middle class over the next several years will be huge," he wrote in August.

Apple paid CEO Tim Cook $14.8m in 2015: What other CEOs make

  • According to the California Law, Tesla CEO Elon Musk, whose net worth is valued at an estimated US$13 billion, should have a minimum wage of US$37,000. However, out of the pay cheque of US$37,584 that he was entitled to, he took nothing.
  • Apple Chief Executive Tim Cook's compensation rose 11.5 percent to US$10.3 million (S$14.79 million) in 2015.
  • Facebook's Mark Zuckerberg reduced his salary to just US$1 (S$1.4) in 2013.
  • Both Google founders Larry Page and Sergey Brin joined the US$1 salary club in 2004 when the company went public.
  • Yahoo's CEO Marissa Mayer has a salary of US$1 million, but her total compensation was US$42 million in 2014.
  • Microsoft CEO Satya Nadella received a salary of over US$900,000, and earned a pay package of over US$84 million in 2014.
  • Despite earning just US$1 in base salary, Oracle’s chief executive Larry Ellison frequently features in the top paid chief executives across the board not just in technology. Ellison took home $78.4m in 2013,

More than 24 per cent of Apple's fourth-quarter revenue - US$12.52 billion (S$17.86 billion) of US$51.50 billion - came from Greater China.

When the company announced its fiscal year fourth quarter earnings in October, Cook said the company had seen "no sign of a slowdown in China," reporting that greater China revenue rose 99 per cent year over year to US$12.52 billion. That figure represented a 5 per cent decrease from the previous quarter.

Ahead of Tuesday's quarterly report, experts said they worried weakness in the Chinese economy could stifle demand for the profit-driving iPhone.

China announced earlier this month that its 2015 economic growth came in at 6.9 per cent - a 25-year low. Most outside experts have expressed doubt about the veracity of the government economic data, instead suggesting that the real growth rate was more likely between 3 and 4.5 per cent.

"If the economy continues to slow over there, that can have an impact on their growth rate, and that's probably why they're looking at other markets outside of China where they can invest more and get more returns," Abhey Lamba, an analyst at Mizuho, told CNBC's "Squawk Alley" on Tuesday morning.

But while analyst notes over the last year have worried about the effects of a Chinese "widespread demand reset" on Apple, incomes continue to rise in the country, and there've been few signs that consumers have rolled back their spending.

That side of the Chinese slowdown, however, may be on its way soon: Consumer confidence fell to a record low in January, according to a monthly ANZ-Roy Morgan index.