Global tech giant, Apple, surpasses predictions, stirring anticipation amidst global apprehension over potential tariff implications.
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It's all about the Apple folks! Despite anticipated tariffs on its iconic products from President Trump, Apple managed to report solid Q2 results on Thursday, with iPhone sales beating expectations.
The tech giant, based in Cupertino, California, announced a sales figure of $95.36 billion and profit of $1.65 per share for the fiscal second quarter ended March 29 - slightly surpassing the estimates of $94.68 billion and $1.63 per share, respectively, according to LSEG data. iPhone sales alone amounted to $46.84 billion, eclipsing the predicted $46.17 billion.
TRUMP ADMINISTRATION CONSIDERING TARIFFS ON APPLE: PRICE INCREASE LOOMS?
Apple shares dipped by 1.5% during after-hours trading following the announcement. Yet, investors have their eyes peeled on the threat of tariffs in the coming quarter, with Apple executives set to unveil forecast information on a conference call with investors starting at 5 p.m. EDT.
The Trump administration has hinted at potential levies on electronics, and the ongoing uncertainty has sent Apple's stock plummeting around 15% in 2023, resulting in a staggering $600 billion in market value lost. Notably, nearly 90% of Apple's products are manufactured in China.
APPLE'S TARIFF MITIGATION STRATEGY: SHIFTING PRODUCTION TO INDIA
Apple is reportedly planning to mitigate tariffs by moving iPhone production to India in an effort to reduce dependence on China and minimize the impact of potential tariffs. Analysts suggest that the company may redistribute some production costs through its supply chain while keeping price increases to a minimum.
In a conversation with Reuters, Apple CEO Tim Cook confirmed that iPhone inventory levels at the start and end of the quarter remained similar, meaning there wasn't a significant buildup of products during the period. The iPhone 16e, a mid-range model sporting a custom modem chip, was a hit during the quarter, contributing to sales.
Apple revealed a 9% drop in sales for the Greater China segment, coming in at $16 billion, just shy of analyst predictions of $15.9 billion, according to Visible Alpha data.
IPHONE 16: AFFORDABLE AND POWERFUL
Apple's iPhone 16, a budget-friendly device with a powerful processor, enables users to enjoy all of the company's latest AI functions.
"In terms of the active iPhone user base, it reached a new high in every geographic region," Cook told Reuters.
Sales in the services business also remained steady, with $26.65 billion in revenue compared to analyst estimates of $26.69 billion, according to LSEG data. Cook said Apple now boasts more than 1 billion subscribers on its platform.
Apple's accessories and wearables segment, including AirPods, saw a revenue of $7.52 billion, falling short of estimated $7.85 billion, based on LSEG figures. However, sales of iPads and Macs came in at $6.40 billion and $7.95 billion, respectively, beating predictions of $6.07 billion and $7.92 billion. Cook highlighted that entry-level iPads experienced the strongest sales during the quarter.
To appease investors, Apple announced an increase in its cash dividend by 4% to 26 cents per share and approved an additional $100 billion for its stock buyback program.
Sources:[1] Reuters[2] The Economic Times (India)
- The Trump administration is considering tariffs on Apple products, potentially causing price increases.
- Apple's shares dipped after announcing Q2 results, but investors are watching for tariff news in the coming quarter.
- Apple is planning to mitigate tariffs by moving some iPhone production to India.
- The iPhone 16, a budget-friendly device with a powerful processor, is expected to be popular due to its affordable price and ability to use all of Apple's latest AI functions.
- The services business, which includes subscriptions, brought in $26.65 billion in revenue for Apple, just shy of analyst predictions.
- Sales of Apple's accessories and wearables, such as AirPods, missed predicted revenue, but sales of iPads and Macs beat analyst estimates.
- To appease investors, Apple announced an increase in its cash dividend by 4% and approved an additional $100 billion for its stock buyback program.
