Apple Inc on Tuesday said that its profits held steady in the fourth quarter of last year, with revenue growth in music, movies, apps and other services offsetting slumping iPhone sales, sparking a rally of the California tech giant’s shares.
Profit in the final quarter of last year was US$20 billion — a dip of less than 1 percent — on revenue of US$84.3 billion, even as money from iPhone sales was down 15 percent from the same period in 2017.
The full extent of the slump in iPhone sales was not clear because Apple for the first time stopped reporting unit sales for its iconic smartphones.
Overall revenue for Apple dipped nearly 5 percent from the previous year, in line with a lowered guidance earlier this month that stunned the market and hammered the shares of the iPhone maker.
“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” Apple chief executive Tim Cook said in the earnings release.
Apple shares rallied 5.75 percent in after-hours trade.
The financial results showed Apple’s services revenue reached an all-time high of US$10.9 billion, up 19 percent over the previous year.
The company also boosted sales of wearables and accessories by 33 percent year-on-year, while an Apple streaming music service launched in mid-2015 now boasts more than 50 million subscribers.
The California-based company is also looking to build momentum for its Apple TV service, with deals to have it installed on television models coming out this year.
During the earnings call, Cook confirmed that Apple plans to produce its own shows in a move that could challenge streaming television giants Netflix Inc and Amazon Prime, which have invested heavily in original content.
“We will participate in the original content world,” Cook said.
“We have signed a multi-year partnership with Oprah,” he said, adding that Apple has hired “some great people.”
Apple took a hit in the Greater China region, where revenue plunged almost 27 percent, which had been expected following the company’s latest revenue warning.
The company plans to cut the price of some of its flagship iPhones for only the second time in the device’s 12-year history, pegging its retail value to past prices in local currencies outside the US instead of the rising US dollar, Cook said.
The move is an attempt to stem weak sales of the iPhone, particularly in overseas markets such as China, where a 10 percent rise in the US dollar over the past year or so has made Apple’s products — which already compete at the top end of the market — much pricier than its rivals.
The company has only once before cut iPhone prices, shortly after it debuted in 2007.
Apple did not say in which nations it would adjust iPhone prices. Resellers in China already began cutting iPhone prices earlier this month after Apple lowered its sales forecast for the fourth quarter of last year.
Additional reporting by Reuters
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