Apple Earnings A Beat But Stock Slips As Wall Street Awaits Tim Cook Tariff Guidance
UPDATE: Tim Cook on tariff impact: Apple chief executive Tim Cook said the company anticipates $900 million in additional costs for the current June quarter amid Donald Trump’s tariffs “assuming global tariff rates, policies and applications do not change for the balance of the quarter and no new tariffs are added.”
That’s not a big hit for the tech giant but Cook cautioned on a call with analysts that “this estimate should not be used to make projections for future quarters.”
For the March quarter, he said, “We had a limited impact from tariffs as we were able to optimize our supply chain and inventory for the June quarter. Currently, we are not able to precisely estimate the impact of tariffs as we are uncertain of potential future actions prior to the end of the quarter.”
Cook said most iPhones sold in the U.S. for the current quarter will have India as their country of origin, and Vietnam for iPads, Apple watches and air pods. China would continue to provide the vast majority of total sales of Apple products outside the U.S. The company has moved quickly to expand production in India and Vietnam.
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“Obviously, we are very engaged on the tariff discussion,” he added.
PREVIOUSLY: Apple beat on the top and bottom line for its fiscal second quarter ending in March but Wall Street is holding tight for any guidance from CEO Tim Cook on the impact of tariffs on its business. That should come on an earnings call set for 5 pm ET.
The tech giant posted net income of $24.78 billion — up from $23. 6 billion — on revenue of $95.4 billion from $90.7 billion the year earlier. The high-margin Services division, which houses Apple TV+, Apple Music among other platforms, grew 12% but a bit less than the Street anticipated. Apple stock slipped in late trading.
IPhone revenue nosed up 2% to $46.8 billion. Mac revenue grew 7% to $7.9 billion. IPad sales jumped 15% to $6.4 billion
“Today Apple is reporting strong quarterly results, including double-digit growth in Services,” said Cook. “We were happy to welcome iPhone 16e to our lineup, and to introduce powerful new Macs and iPads that take advantage of the extraordinary capabilities of Apple silicon. And we were proud to announce that we’ve cut our carbon emissions by 60 percent over the past decade.”
That’s fine but investors are eager to say the least for any clarity around the impact of Donald Trump’s tariffs. Apple makes about three-quarters of its revenue from iPhones, Macs and iPads that have mostly been made in China, the nation hit the hardest so far by import taxes.
Cook hasn’t publicly commented yet on the swirling global import taxes that have sowed turmoil with markets, corporate plans and consumer confidence. Even though the administration walked back the steep 145% on China to 20% for electronics, Apple has been quickly expanding iPhone production in India.
Trump has announced major tariffs for every country around the world then paused them for 90-days to pursue separate trade deals with each.
It’s possible that the silver lining for Apple this past quarter was U.S. customers and retailers stocking up on iPhones and other products to get ahead of the tariffs.
There are also legal and regulatory overhangs. The quarterly numbers hit the day after a scathing ruling against Apple in its longstanding antitrust battle with Fortnite maker Epic Games as a federal judge said the company knowingly violated a court order prohibiting it from collecting fees on purchases made outside of iOS apps. Judge Yvonne Gonzalez held the company in contempt and referred Apple and one of its executives to federal prosecutors for a possible criminal investigation.