Apple stock (AAPL) sank in early trading Friday, despite the company posting better-than-expected earnings in its first quarter Thursday, as sales in one of its most important markets fell year over year.
Apple saw earnings per share of $2.18 on revenue of $119.6 billion in the prior quarter. Analysts were anticipating earnings of $2.11 on revenue of $117.9 billion.
But sales out of China, the company's third-largest region after North America and Europe, were lower than anticipated, topping out at just $20.8 billion. Wall Street was looking for sales of $23.5 billion. The company reported Greater China sales of $23.9 billion in the first quarter last year.
The company's stock fell more than 2% at the start of trading on Friday.
Apple is dealing with both a sluggish Chinese economy as well as a resurgent Huawei in the country, which has hurt sales in the region. But strong showings in both North American and Europe helped buoy the company.
The company reported iPhone sales of $69.7 billion, compared with expectations of $68.6 billion.
“Today Apple is reporting revenue growth for the December quarter fueled by iPhone sales, and an all-time revenue record in Services,” Apple CEO Tim Cook said in a statement.
“We are pleased to announce that our installed base of active devices has now surpassed 2.2 billion, reaching an all-time high across all products and geographic segments.”
Apple’s Mac revenue topped out at $7.8 billion in the first quarter, missing analysts' expectations of $7.9 billion. The company's iPad revenue also missed at $7 billion; Wall Street was looking for $7.1 billion. That's a steep drop from the $9.4 billion the iPad business generated last year.
According to Bloomberg’s Mark Gurman, Apple will introduce refreshed iPads and Macs in March, which could help goose sales numbers for both business segments in the year ahead.
Wearables, home, and accessories pulled in 12 billion, hitting estimates. Apple has been contending with an ongoing patent battle against medical device maker Masimo, which forced the company to temporarily take the device off of store shelves.
It has since removed the blood oxygen sensor component that triggered the dispute from its Series 9 and Ultra 2 watches, but it’s unclear how much of an impact that has had on sales.
Apple’s Services segment, meanwhile, reached $23.1 billion, short of an anticipated $23.4 billion.
Apple’s earnings come as the company prepares to launch its Vision Pro AR/VR headset. The device, which Apple calls a spatial computer, goes on sale Feb. 2 for $3,499. And while it’s certainly an impressive product, its price tag will likely limit sales among most consumers.
While Apple doesn’t release exact device sales figures, CEO Cook said during the earnings call that Apple is seeing a good amount of interest in the Vision Pro from enterprise customers, including demos that take advantage of the headset's capabilities.