Major surprise: Apple’s Q1 sales growth stalled in the Americas, but was OK in Europe

Apple Earnings Analysis Q1 2013

One of the big surprises in Apple’s holiday quarter was the weak iPhone volume — iPhone sales came in at slightly below 48 million, missing the consensus expectation of 50-52 million units. But an even bigger surprise was where Apple’s (AAPL) sales growth softened the most: in the U.S. and the surrounding region.

In the autumn quarter, the Americas region still delivered robust 44% annualized sales growth even as growth in Asia-Pacific and Europe cooled down to 15% and 8%, respectively. For the Christmas quarter, many expected further European weakness and American strength. Instead, revenue growth in North and South America fell all the way to  15%, while Asia and Europe maintained 10-11% growth rate.

Various sales surveys, including Kantar Worldpanel, indicated that iPhone was still gaining a lot of market share in the United States, while European share gains had fizzled by the end of 2012. Yet Apple was able to avoid further slowdown in Europe, while the American growth dropped to less than half of the pace of the autumn period. It is possible that the Latin America is now weighing down performance in North and South America for Apple? The iPhone is facing big trouble in Brazil, where it is undermined by Samsung’s (005930) low-end attack.

Perhaps this mix of bad and good news is why Apple’s share price avoided a more massive swing right after the report. While iPhone volumes were light, the iPad volume was a robust 22 million units, far above the worst-case scenarios painted by Cowen, JP Morgan and other bearish brokerages.

Though American sales growth was curiously light, the European numbers were an undeniable relief after the scary dip to a single-digit year-over-year growth rate in the autumn. There will obviously be selling pressure generated by the iPhone miss, but the big iPad sales dip and the European cave-in did not happen this quarter.

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