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At a time when the tech industrys biggest companies are rebounding from a post-pandemic dip, Apple is suffering through its most prolonged sales slump in more than a decade.

On Thursday, the worlds most valuable tech company said that sales fell 1 percent, to $89.5 billion, from last year for the three months that ended in September, bringing an end to a fiscal year in which it posted sales declines every quarter. The company reported that profits rose 11 percent, to $22.96 billion.

Apples most important business, the iPhone, rallied last month behind the release of four new devices, which boosted sales 3 percent, to $43.81 billion, from last year. And the companys sales for software and services, such as Apple Music and cloud storage, jumped 16 percent, to $22.31 billion.

But sales sank for most of the companys other businesses, including the Mac, iPad, and the Apple Watch and AirPods. Total product sales dropped by 5 percent, to $67.18 billion.

The results exceeded Wall Streets expectations for $89.34 billion in sales and $21.77 billion in profit. The company said that it expected sales to be similar in the current quarter to the same period a year ago, disappointing Wall Street, which had projected that sales would increase from a year ago.

Apples shares have declined 11 percent from their peak this summer and were down more than 3 percent in after-hour trading on Thursday.

Tim Cook, Apples chief executive, faces a bevy of challenges in the year ahead. After a surge in demand for new 5G iPhones, wireless carriers are reporting a slowdown in the number of people buying new smartphones in the United States, Apples largest market, according to Arete Research, an investment research firm.

The company said that supply constraints for the iPhone 15 in September blunted sales during the month, but that supplies were improving and would be able to fulfill demand in the current quarter.

In China, Apple is confronting renewed competition in the luxury smartphone business from Huawei. The Chinese smartphone maker had been hampered in recent years by U.S. restrictions on its access to 5G technology and Android software, but in August it revealed a jade-green smartphone, Mate 60 Pro, that has the same capabilities as many iPhones. Its release was followed by the Chinese government directing employees of some government agencies to stop using iPhones for work.

Sales of Apples new flagship iPhones declined 4.5 percent during the final weeks of September from last year, according to Counterpoint Research, which analyzes the smartphone market. The dip was an outgrowth of the broader downturn in consumer spending in China, the firm said.

Last month, China expanded its challenge to Apples business by launching a regulatory review of the companys biggest iPhone manufacturer, Foxconn of Taiwan. The manufacturer is facing a tax audit and being investigated over its compliance with land use regulations. The scrutiny comes as Terry Gou, Foxconns founder, runs for Taiwans presidency in a campaign that could boost the ruling party, which opposes closer ties with Beijing.

Mr. Cook traveled to China last month in an unannounced visit that included stops at an Apple store, a visit to the factory of Luxshare Precision, a Chinese iPhone manufacturer, and a meeting with Wang Wentao, the countrys commerce minister.

I could not be more excited about the interactions I had with customers and employees, Mr. Cook said during a call with analysts on Thursday. He said that the companys business in China remained strong, adding that the iPhone business set a record in mainland China during the three months that ended in September.

The broader tech industry has been lifted by enthusiasm for generative artificial intelligence. Last month, Microsoft reported that investments in A.I. were beginning to help sales of its cloud-computing business. Googles parent company, Alphabet, which has invested heavily in A.I., disappointed investors, who had hoped for a greater lift to sales. Amazon and Meta Platforms, Facebooks parent company, also emphasized their investments in that area.

But Apple, which is known for its secrecy, has been quiet about its plans for generative A.I. On Thursday, Mr. Cook said that the company was investing in generative A.I. but was unlikely to provide details until it had a product to bring to market. Were going to do it responsibly, and youre going to see product advancements over time where those technologies are at the heart, Mr. Cook said.

As it looks ahead to next year, much of the companys focus will shift to the release of its first major new product since 2014: high-tech goggles that blend the real world with virtual reality. The $3,500 device, the Vision Pro, has the potential to provide a new revenue stream at a time when sales of its other products have slowed. Analysts project Apple will sell fewer than half a million units.

The company also is focused on reviving sales of its iPads and Macs. On Monday, Apple revealed new MacBook Pros and iMacs with speedier processors and encouraged customers with older Macs to upgrade. Sales of Macs declined 27 percent, to $29.36 billion, over the past fiscal year.

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Apple's Sales Drop Slightly While Profit Is Up 11 Percent - The New York Times