Apple Inc. delivered fiscal fourth-quarter earnings and revenue today that topped analysts’ expectations, but its overall sales declined for a fourth successive quarter.

Each of its hardware businesses outside of iPhone struggled, and executives indicated that the company is unlikely to return to growth in the holiday quarter. The news put pressure on Apple’s stock, which fell more than 3% in the extended trading session, erasing a gain of 2% earlier in the day.

The company reported earnings before certain costs such as stock compensation of $1.46 per share, beating Wall Street’s target of $1.39. Overall, revenue fell 1%, to $89.5 billion, in the quarter, but still came in above the $89.28 billion analyst forecast. Net income for the quarter came to $22.96 billion, up from $20.72 billion a year earlier.

Once again, Apple declined to offer formal guidance, a practice it has kept up with ever since the outbreak of the COVID-19 pandemic back in early 2020. However, Chief Financial Officer Luca Maestri said on a call with analysts that revenue for the December quarter will likely be similar to the same period one year earlier. The problem is that the coming quarter will be one week shorter than last year’s.

The implication is that Apple may miss expectations. Wall Street analysts are modeling $122.98 billion in sales for the holiday quarter, which would represent growth of about 5%.

During the previous quarter, the iPhone business was the only hardware unit to meet expectations, with revenue up 2% to $43.81 billion, matching Wall Street’s guidance.

In an interview with CNBC, Chief Executive Tim Cook (pictured) said the fourth quarter only included one week of sales of the new iPhone 15 model. He added that it was doing better than the iPhone 14 did during the same quarter one year ago. “If you look at iPhone 15 for that period of time and compare it to iPhone 14 for the same time in the year-ago quarter, iPhone 15 did better than iPhone 14,” Cook said.

While iPhone sales just matched expectations, the Mac and iPad business units were less impressive. iPad revenue came to $6.44 billion, down 10% from a year earlier but above the analyst target of $6.07 billion. Apple didn’t release any new iPad models during the quarter.

Mac was even worse, with revenue falling 34% from a year earlier, to just $7.61 billion, well below the $8.63 billion target. During the quarter, Apple launched new MacBook Pro and iMac desktop models, but sales of those products were not included in today’s results.

Cook explained that Mac sales face a very difficult comparison to one year ago, when the unit delivered an all-time record fourth quarter. A year earlier, supply chain disruptions meant that many third-quarter sales were pushed into the fourth, the CEO said. “I think the Mac is going to have a significantly better quarter in the December quarter,” Cook added. “We’ve got the M3, we’ve got the new products, and we don’t have the compare phenomenon on a year-over-year basis.”

Apple’s wearables business, which includes devices such as the Apple Watch and AirPods, also missed expectations. Sales declined 3% from a year ago, to $9.32 billion, below the $9.43 billion analyst target.

Charles King of Pund-IT Inc. said investors are likely to be very concerned about the health of Apple’s hardware businesses, especially the flat outlook for iPhone sales during the holiday season.

“The holiday season is historically Apple’s best period and the outlook is especially bad news for a product that continues to drive about half of the company’s annual revenues,” King said. “That was compounded by steep declines in Mac and iPad revenues, with overall product revenues down 5% year-over-year.”

Once again, Apple appears to have been saved by the strong performance of its services business, which includes subscriptions to iCloud storage and Apple Music, as well as warranties through AppleCare. Services revenue increased 16%, to $22.31 billion, above the $21.35 billion target. The unit also receives money from Google LLC, which pays Apple to be the default search engine on the Safari browser. This year, it’s believed that Google paid Apple as much as $19 billion for that privilege.

“Apple’s services group delivered the goods in terms of growth and revenue, but that wasn’t enough to offset the bad news from its products,” King said. “While Apple should be congratulated for actively diversifying its business to embrace a range of service and entertainment offerings, its share performance largely reflects the fortunes of its consumer hardware products. That balance will almost certainly shift over time, but it won’t protect Apple and its shareholders from short-term pain.”

Holger Mueller of Constellation Research Inc. said Apple is entering a new era, with its hardware businesses in decline and its services growing, but not fast enough. He pointed out that hardware revenue overall declined 20%, while services grew by just 7%.

“The good news is that services are more profitable than hardware, and that meant Apple was able to deliver a similar earnings per share,” Mueller said. “The trouble is that with less hardware sales, its customer base for services is shrinking. To satisfy investors, Apple will need to deliver a great holiday season to increase its install base for services sales.”

During the call, Maestri told analysts that Apple’s installed base of devices, which refers to the number of iPhones, iPads and Macs being actively used, hit an all-time high during the quarter. He also said Apple now has more than 1 billion paid subscriptions, including its own services and those for third-party apps available through the App Store.

Investors have been closely watching Apple’s business in Greater China, its third-largest market. They’re worried about the increased competition it faces from rivals such as Huawei Technologies Co. Ltd., and those concerns seem to be justified, since sales in the region were flat year-over-year. All told, Apple generated $15.1 billion in sales from China, Hong Kong and Taiwan, missing Wall Street’s target of $16.8 billion.

Apple continues to hoard a huge amount of cash and cash-like securities, totaling $162.1 billion at the end of the quarter. The company will spend $25 billion during the current quarter on share repurchases and dividends of 24 cents per share.

Photo: The Climate Group/Flickr