Apple Shares Down On $900 Mln Tariff Hit, Despite Strong Q2, Dividend Growth, $100 Bln Buyback

(RTTNews) - Shares of apple inc. were down around 4 percent in the after-hours trading on Thursday after the tech major said it sees $900 million hit from tariffs in the third quarter, as it shifts U.S. iPhone supply to India from China. This was despite reporting higher profit in its second quarter, above market estimates, with strong growth in revenues. The company also announced higher dividend and $100 billion share buyback.

Looking ahead, for the third quarter, Apple expects revenue growth in the low to mid-single digits, with a gross margin between 45.5% and 46.5%.

In the earnings call with investors, Apple CEO Tim Cook said that the company expects US tariffs to cost $900 million in the current quarter, even though its impact was limited at the start of the year.

Cook said that he expects a majority of iPhones sold in the US will have India as their country of origin, and that for now, Apple's products were exempt from Trump's most severe reciprocal tariffs.

Further, for almost all US-bound iPad, Mac, Apple Watch and AirPod products, Vietnam would be the country of origin, while China will continue to be the origin of most Apple products made for sale outside the U.S.

Cook said, "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. Assuming the current global tariff rates, policies and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs."

The CEO also reminded about the company's plans to invest $500 billion across several US states over the next four years.

Apple's board of directors has declared a cash dividend of $0.26 per share, an increase of 4 percent. The dividend is payable on May 15 to shareholders of record as of the close of business on May 12.

The board has also authorized an additional program to repurchase up to $100 billion of the company's common stock.

In its second quarter, Apple's net income came in at $24.78 billion or $1.65 per share, higher than $23.64 billion or $1.53 per share last year. Analysts on average had expected the company to earn $1.62 per share. Analysts' estimates typically exclude special items.

The company's revenue for the period rose 5.1 percent to $95.36 billion from $90.75 billion last year.

Revenues from products grew to $68.71 billion from last year's $66.89 billion, with growth in iPhone, Mac, and iPad, while revenues were lower in Wearables, Home and Accessories.

Services revenues climbed to $26.65 billion from $23.87 billion a year ago.

On the Nasdaq, Apple shares had closed Thursday regular trading at $213.32, up 0.39 percent. In the after-hours, shares fell 3.8 percent to trade at $205.25.

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