Investors in Apple Inc. had plenty to cheer about today as the company reported earnings that beat expectations and forecast a strong holiday quarter.

Apple’s solid fiscal fourth-quarter results were all the more impressive as iPhone sales came in lighter than expected.

For the quarter just gone, Apple reported a profit before certain costs such as stock compensation of $3.03 per share on record fourth-quarter revenue of $64 billion. That comfortably beat Wall Street’s expectations, with analysts having forecast a profit per share of just $2.84 on revenue of $62.99 billion.

Shareholders were also watching Apple’s guidance for the all-important fiscal 2020 first quarter, which is typically one of the company’s strongest due to holiday season sales. And Apple didn’t disappoint there either, with the midpoint of its $85.5 billion to $89.5 billion forecast range coming in ahead of the $86.92 billion estimate. The company has a good chance of surpassing the record $88.3 billion in revenue it posted in its December 2017 quarter, if all goes well.

Not surprisingly, Apple’s stock rose almost 2% in after-hours trading.

“We’re very optimistic about what the holiday quarter has in store,” Apple Chief Executive Officer Tim Cook (pictured) said in a conference call.

Cook added that he was optimistic an end is in sight to the ongoing U.S.-China trade war which has severely hurt iPhone sales in the Chinese market. “The tone around tariffs has changed significantly,” he said.

Of course, Cook probably wasn’t happy to see iPhone sales fall by 9% compared with the same quarter a year ago, though he said that was still an improvement over previous quarters this year, when sales fall by as much as 15%.

But the decline in iPhone sales makes Apple’s overall performance seem all the more impressive, as its total revenue rose 2% year-over-year.

The growth was thanks to strong performances by Apple’s services and wearables businesses. Services revenue, which includes AppleCare warranties and subscriptions to iCloud, grew 18% in the quarter to $12.51 billion. Meanwhile, the Wearables unit, which includes sales of its popular AirPods earbuds, did even better, with revenue shooting up by 54% to $6.52 billion.

The growth of Apple’s services and wearables businesses shows that Apple is successfully navigating toward a future in which smartphone design has plateaued, said Charles King, an analyst with Pund-IT Inc.

“Apple is achieving that through robust growth in it’s services organization, along with healthy assists from iPad, wearables and home products,” King said. “If those units continue to perform well, they should more than make up for the continuing gentle declines in iPhone and Mac sales. Overall, this is excellent news for Apple and its shareholders.”

Other analysts were a bit less enthusiastic, though, saying that services and peripherals had simply made up for the shortfall in iPhone sales.

“As long as Apple can keep its iPhone installed base happy and buying add-ons, it will do fine for a while,” Patrick Moorhead of Moor Insights & Strategy said.

Holger Mueller of Constellation Research Inc. added that although 2% revenue growth is better than nothing, it’s a far cry from the glory days of Apple. “They key will be to see if services and accessories can bring Apple back to double digit growth,” Mueller said.

Apple said it had $205.9 billion total cash on hand at the end of the quarter, down 2.2% from the previous three-month period thanks to its aggressive buyback strategy. During the quarter it spent $18 billion on share buybacks and $3.5 billion more in dividends.

Photo: Robert Occhialini/Flickr