Apple girds for more trade war pain, trims buyback

Apple on Thursday trimmed its share buyback program by $10 billion, with CEO Tim Cook telling analysts that tariffs could add about $900 million in costs this quarter as the iPhone maker shifts its vast supply chain to minimize the impact of President Donald Trump's trade war.

Cook also said Apple's planned $500 billion in spending to expand its U.S. footprint would involve both capital outlays and increased operational expenses as it builds out server and chip factories with its manufacturing partners. In addition, he outlined how Apple has started to build up a stockpile of products so that the majority of its devices sold in the U.S. this quarter will not come from China.

Taken together, analysts said the moves showed one of the most profitable companies in the history of business battening its hatches as it moves into uncharted waters.

"We were expecting to see more buybacks. Knowing the company, this indicates that Tim Cook is hoarding cash for difficult times," said Thomas Monteiro, senior analyst at Investing.com. "While that's not exactly a problem in itself, it certainly suggests that the company is not as certain about its near-term future as it was in previous quarters."

Apple shares were down 4.3 per cent after the company released quarterly results.

So far, the trade war has not been a problem for Apple's sales, with Cook saying the company did not see consumers rushing to stock up on Apple items.

The Cupertino, California-based company said sales and profit for the fiscal second quarter ended March 29 were $95.36 billion and $1.65 per share, respectively, compared with analyst estimates of $94.68 billion and $1.63 per share, according to LSEG data. Sales of iPhones were $46.84 billion, compared with estimates of $46.17 billion, according to LSEG data.

For the current fiscal third quarter, Apple executives said the company expects low-to-mid single-digit revenue growth, which is in line with analyst expectations of 4.28 per cent growth to $89.45 billion, according to LSEG data.