Apple built its business through innovation. But these days it has leaned towards diplomacy.
Apple's CEO Tim Cook recently won a tariff exemption on exports of Chinese-made iPhones. The pilot released Apple and focused on business, and recently it was in good condition.
The new low-priced iPhone introduced in February and strong sales of apps and services helped the company earn $24.788 billion in quarterly profits. The company's revenue rose 5% to $95.36 billion.
The results exceeded Wall Street analysts' expectations for a profit of $24.37 billion and sales of $94.35 billion. The company said it expects revenue to rise slightly in the current quarter, which closes in June. Stocks fell more than 3% in after-hours trading.
Apple's steady performance came amidst the turbulence. In just a few months, the company had to navigate internal and external obstacles, including the highly anticipated failure of its artificial intelligence system and the Trump administration's punishing tariff challenges on products made overseas.
In a call with Wall Street analysts, Cook said tariffs have begun to bite the business. He estimated $900 million in expenses this quarter due to tariffs. These tax rates remain the same and no new rates have been introduced.
Apple's shares plummeted last month after President Trump imposed a 145% tariff on exports from China. There, they manufactured 80% of the iPhone sold by Apple and placed tariffs on other countries that manufacture iPads and Macs, such as Vietnam. The tariffs erased the company's market value of approximately $770 billion over four days.
Wall Street analysts predict that Apple will need to increase the iPhone price from $1,000 to $1,600. Some customers raced to buy iPhones before prices went up.
But three months after giving $1 million personally to Trump's inauguration, Cook pushed the White House to ease tariffs and temporarily tolerantly persuaded the Trump administration.
Cook said Apple responded to tariffs by revamping its supply chain and avoiding tariffs on products collected in China. In the current quarter, he said the company will assemble the majority of iPhones for sale in the US, India. Mac, iPad and Airpods can be assembled in Vietnam.
“We manage our company the way we always have, with thoughtful and intentional decisions,” Cook said. “We look ahead and we're confident.”
On Thursday, Apple said sales of its most important business, the iPhone, rose 2% over the quarter to $46.844 billion. The company has increased iPhone sales by over 10% in Japan, India and the Middle East, helping to claim the world's largest share of smartphone sales in three months, according to market research firm Counterpoint Research.
The company continues to struggle in China, reporting a decline in sales in the sixth quarter. Total revenue from the region was $16 billion quarterly, down 2% from a year ago. It was the only area where sales fell.
“We're looking forward to seeing the company's high-tech research firm, Ben Bajarin, principal analyst at Creative Strategies,” said: “The question is, what will happen if more tariffs hit?”
The company's services business, including selling apps, Apple Music and Apple Pay, surpassed the devices. Apple reported revenue from its $26.65 billion business, up 11.6% from last year.
However, the future of Apple's services business is uncertain. Under Wednesday's antitrust law, a federal judge denounced the company's business practices and found that it could not collect a 27% fee for selling apps outside the app store. Her order allows the app to cut Apple out of the business, providing one of the company's most important revenue streams.
Cook said Apple opposes the ruling and plans to appeal it.
In the case of another antitrust, Apple could lose the $2 billion in service revenue that Google pays to the iPhone web browser's automatic search engine. A federal judge ruled last year that Google broke the law to maintain its search monopoly. This month he convened a hearing to address the illegal activities, including a remedy that includes Google's payment restrictions to Apple.
The company's device business is also facing questions. Last year, Apple revealed a generation AI system that can improve email, summarise notifications, and upgrade Siri, a virtual assistant. It promoted a system called Apple Intelligence as the main reason to buy a new iPhone. However, in March, the company said it was delayed until later this year, pulling ads that promote functionality.
“They just meet our quality bar because they need more time to complete the work,” Cook said. “It takes a little longer than we thought, but we're making progress.”
