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Apple Stock Slips Despite Earnings Beat - Services Business Falls Short, China Sales Drop 13%

Apple's stock falls despite beating earnings, with China sales dropping 13% and services business falling short of expectations.

Apple's stock took a hit in late trading on Thursday, despite the fact that the company's December-quarter results exceeded Wall Street's expectations. The company's iPhone sales were strong, but its services business did not grow as much as anticipated.

One of the biggest concerns for Apple is the decline in its China business, where the company faces increasing competition in the smartphone market from rivals like Samsung. Greater China sales for the company were $20.8 billion, which is a 13% drop from the previous year. CEO Tim Cook mentioned on the earnings conference call that iPhone sales in China were down in the mid-single digits, indicating even steeper declines for other hardware products.

On a positive note, Apple has an installed base of active devices that has surpassed 2.2 billion. For the quarter, the company reported revenue of $119.6 billion, marking a 2% increase from the previous year and breaking a four-quarter streak of revenue declines. Profit was $2.18 a share, surpassing the Wall Street consensus forecast of $2.11 a share. Gross margin was 45.9%, up from 43% in the year-ago quarter and up 70 basis points sequentially.

iPhone revenue for the quarter was $69.7 billion, a 6% increase from the previous year and higher than the Wall Street consensus forecast of $65.8 billion. Services revenue was $23.1 billion, an 11% increase, but slightly below the consensus view at $23.3 billion. Mac sales were $7.8 billion, roughly the same as the previous year, and slightly below the consensus of $7.9 billion. iPad sales were $7 billion, a 25% decrease, and below the Street's $7.4 billion forecast. Wearables, home, and accessories revenue was $12 billion, above the consensus at $11.3 billion, but down 11% from the previous year. Overall product sales were $96.5 billion, approximately the same as the previous year.

Sales in the Americas were $50.4 billion, a 2% increase. In Europe, sales were $30.4 billion, up 10%. Japan sales were $7.8 billion, up 15%. Sales in the rest of the Asia Pacific region were $10.2 billion, up 7%.

Despite the positive aspects of the report, Apple's shares were down 1.7% in after-hours trading. This suggests that investors may have concerns about the company's future performance, particularly in light of the challenges it faces in China and the slower-than-expected growth in its services business.

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