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Apple Rallies as iPads, AirPods and Services Drive Earnings Beat

Apple posted better-than-expected revenue and earnings for its fiscal fourth quarter, driving its stock to new heights. Demand for Apple services and wearable devices helped drive revenue gains.

Apple posted revenue of $64.04 billion, up 2% from a year earlier, above the high end of the company’s guidance.

Apple posted better-than-expected revenue and profit for its fiscal fourth quarter, driving its already highflying stock to new heights.

The quarter that ended Sept. 30 was driven by Apple’’s growing services business, as well as expanding demand for both iPads and wearable devices, in particular AirPods, while iPhone sales were down more than 9%.

Apple (ticker: AAPL) posted revenue of $64.04 billion, up 2% from a year earlier, above the high end of the company’s guidance of $61 billion to $64 billion, and ahead of the Wall Street consensus at $63 billion. Profit was $3.03 a share, up 4% from $2.91 a year earlier, and ahead of the Street’s $2.84.

Apple bought back 86 million shares in the September quarter, for about $18 billion. Including dividends, the company returned about $21 billion to shareholders in the quarter.

For the current quarter, Apple forecasts revenue of $85.5 billion to $89.5 billion, with the midpoint of the range above the Street consensus of $86.9 billion. The company sees gross margin for the quarter ranging from 37.5% to 38.5%.

“We concluded a groundbreaking fiscal 2019 with our highest [fourth quarter] revenue ever, fueled by accelerating growth from Services, Wearables and iPad,” Apple CEO Tim Cook said in a statement. “With customers and reviewers raving about the new generation of iPhones, today’s debut of new, noise-cancelling AirPods Pro, the hotly-anticipated arrival of Apple TV+ just two days away, and our best lineup of products and services ever, we’re very optimistic about what the holiday quarter has in store.”

Fourth-quarter product revenue was $51.5 billion, down slightly from $52.3 billion a year earlier. Services revenue was $12.5 billion, up 18% from $10.6 billion. Gross margin was 38%, right in the middle of the guidance range of 37.5% to 38.5%.

Greater China revenue was $11.13 billion, down 2.4% from a year earlier. In the Americas, revenue was up 6.6% to $29.32 billion.

Apple said iPhone sales were $33.4 billion, down 9.2%. Mac sales were down 4.8% to $6.99 billion, but iPad sales spiked 16.9%, to $4.66 billion. Wearable products, home and accessories sales were $6.52 billion, up 54.4%.

Cook said on the company’s post-earnings conference call that effective today it will allow customers to buy iPhones with payments spread over 24 months with Apple’s credit card with no interest or fees.

The company closed the fiscal year with just over $205 billion in cash and marketable securities.

Apple also said on the call that Nancy Paxton, the head of investor relations, will retire at the end of December, after 93 earnings calls.

Apple stock was up 1.5%, to $247 in premarket trading.

Write to Eric J. Savitz at eric.savitz@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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