After a torrid rally in Apple (AAPL ) stock in the past three months that took its stock from under $100 some 20% higher, traders wondered how much more upside was left in the stocks, and if the surge could continue. And so, moments ago, Tim Cook tried hard to deliver, if not so much in the current quarter where revenue and ASPs missed, and EPS beat by just one penny, then certainly with his guidance for what the company expects in the year’s final quarter, however judging by the stock’s performance he failed. This was also the first time Apple posted an annual profit decline since 2001, as the two-thirds of revenue it gets from the iPhone exposed it to waning smartphone demand.

For Q3, Apple reported Q4 revenue of $46.9 billion, which declined 9% Y/Y and which was also below the consensus estimate of $47 billion in the quarter in which the new iPhone was introduced, with the company selling 45.5 million iPhones in the quarter, down 5% Y/Y but above the 45 million expected. Earnings of $9 billion declined 19% Y/Y from the $11.1 billion reported a year ago.

Revenues from services increased 24% to $6.3bn in the fourth quarter, making it Apple’s second-largest source of income after the iPhone amid another sluggish performance by the Mac and iPad.“Services were the highlight of the quarter,” Apple finance chief Luca Maestri told the FT in an interview. “Momentum is very good and even accelerating.”

And just like that AAPL is a services company.

Joking aside, looking at its products, Apple reported a gross margin of 38% which beat estimates of 37.9%; this however, was offset by an average iPhone ASP of $618.72 which missed expectations of $625.

Additionally, which AAPL posted a sequential increase in virtually every region in which it operates, its China sales declined modestly by 1% to $8.785 sequentially, and down a whopping 30% Y/Y, missing estimates of $8.85 billion. Maestri defended Apple’s performance in China, where revenues fell by 30 per cent year on year in the quarter and 17 per cent for the full year. He said that the popularity of the iPhone 6 two years ago made for a “very difficult compare”.