By Akash Sriram and Kanchana Chakravarty
(Reuters) - Apple shares (NASDAQ:AAPL) fell 5% on Friday after the company trimmed its stock buyback program and CEO Tim Cook flagged a $900 million tariff-related hit to costs this quarter amid a raging Sino-U.S. trade war.
U.S. President Donald Trump’s tariff flip-flops have thrown corporate plans into disarray, even for Apple, which along with Microsoft (NASDAQ:MSFT), has been juggling the title of the world’s most valuable company.
The company has been stocking up to cushion the blow from potential supply-chain snarls and rising U.S. import costs. But with consumer confidence sliding, some analysts said Apple may face weakening iPhone demand in its home market.
Its decision to lower its buyback authorization by $10 billion also marked a rare pullback that signaled a desire to preserve cash in the face of uncertainty. Typically it has either maintained or increased its repurchase levels.
"The $100 billion buyback announced is below the $110 billion announced a year ago, which we found as a bit of a head-scratcher, as Apple historically either holds its buyback or increases it authorization," said Angelo Zino, equity analyst at CFRA Research.
Analysts have warned U.S. tariffs on China could drive up iPhone prices, if Apple chose to pass on the added costs to consumers. But, Cook said most of the devices sold in the U.S. this quarter would be manufactured outside China.
A last-minute exemption for consumer electronics has also offered temporary relief, even as the White House continues to weigh further trade actions.
Cook said on Thursday Apple is ramping up efforts to shift its supply chain away from China, with most U.S.-bound iPhones now set to be assembled in India.
Apple reported quarterly sales of $95.36 billion and earnings of $1.65 per share, narrowly beating market expectations. The company forecast low-to-mid single-digit revenue growth, in line with muted expectations.
In China, Apple posted $16 billion in revenue, slightly above forecasts, though competition from Huawei and slower AI rollout continue to pressure market share.
If losses hold, Apple is on track to shed more than $150 billion in market value, while a bullish outlook from Microsoft earlier this week has helped the Windows-maker become the world’s most valuable company.
SHIFTING SUPPLY CHAIN
Cook said Apple’s shift away from manufacturing in China would include sourcing more chips from the U.S. and expanding its footprint in key states like Texas, Arizona, and Oregon, but acknowledged the transition comes at a cost.
"Having everything in one location had too much risk," he told analysts, referring to Apple’s historical dependence on Chinese manufacturing.
Apple’s move to import iPhones from India marks a further shift in its production strategy, aimed at sidestepping future tariffs while expanding its presence in a fast-growing emerging market.
"Part of their long-term vision is a big portion of the supply chain being in India," said Joe Tigay, portfolio manager at Catalyst Funds, which owns Apple shares.
"I think just kind of having that base there would also do well for their relations or their prestige in the country."