Full year revenues reached $260.2bn, down 2% on last year, however fourth quarter sales of $64bn were better than analysts expected. That reflects good sales growth in the Services division, iPad and Wearables.
Final quarter operating profit was 3.1% lower than 2018 at $15.6bn, but this was also better than the market had hoped.
The shares rose 2.6% in afterhours trading.
In times gone by, Apple won customers with its ground-breaking products, each one more innovative than the last. But differences between iPhones are subtle these days, and the handsets last longer. That's hurting revenues, since lack of innovation makes it harder to justify regular upgrades. Especially when rivals are closing the technology gap at a fraction of the price.
External factors are hardly helping either. The economic backdrop remains uncertain and the battleground in the ongoing trade war between the US and China has turned to tech. That's squeezed sales trends in China, which had been a key growth market.
But it's not all doom and gloom. CEO Tim Cook has said pressures in the Far East are easing, and longer-term, investors should remember it's not all about price and technical spec. Apple has successfully positioned itself as an aspirational, yet accessible brand.
Apple customers are incredibly loyal and Apple's looking to take advantage of that with its Services business - now comfortably the second largest division. It makes money from charging subscriptions for its music service and getting fees from app developers to use the App store, and has helped revenues grow rapidly. The soon to launch TV+ is Apple's attempt to keep its loyal groupies out of Netflix's clutches and secure an even larger share of their wallets.
Service margins are higher and revenues should be reliable - which all being well will take the pressure off the group to deliver constantly rising hardware sales.
Of course, Apple still needs to keep its core customers happy and that will involve cooking up new "must haves". That doesn't come cheap. Research & Development costs are on the up, which means margins and profits are suffering a bit.
We think it's important Apple spends money on pushing new frontiers though. So far earnings per share have been protected by an extensive share buyback programme, and the group manages to offer a 1.3% prospective dividend yield.
All-in-all, Apple is in a good position. Future spoils will depend on its ability to keep growing higher-margin areas of the business, while also creating another generation of coveted products.
Fourth quarter results
iPhone sales still make up the biggest portion of revenue, but growth dipped again this quarter, by 9% to $33.4bn and Mac sales were down 4.8% at $7bn. By contrast iPad sales improved 16.9% to reach $4.7bn and there was more good news from Wearables, Home and Accessories- sales of $6.5bn increased 54%.
Services had a record quarter, with revenue reaching $12.5bn - an increase of 18% on last year.
Operating costs increased 9.1%, driven by a 9.6% rise in research and development spend. As such, operating margins were 24.4%, compared to 25.6% last year. Earnings per share for the year were $11.97, slightly lower than 2018.
Apple expects revenue to be between $85.5 - $89.5bn, and operating costs of $9.6 - $9.8bn next quarter. Its new streaming service, Apple TV+ will launch on 1 November 2019.
The group spent $18bn on buybacks in the quarter, and a dividend of $0.77 per share will be paid on 14 November 2019, to those holding shares on November 11 2019.
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