Apple Inc is to miss its revenue forecast for the quarter to next month due to the coronavirus epidemic, the US tech giant said on Monday, warning that iPhone supplies worldwide would also be impacted, underlining the economic cost of the health crisis.
The COVID-19 death toll now exceeds 1,800 in China, where it has infected more than 72,000 after emerging in Hubei Province in December last year.
“We are experiencing a slower return to normal conditions than we had anticipated,” Apple said in a statement. “As a result, we do not expect to meet the revenue guidance we provided for the March quarter.”
Photo: AP
Apple had forecast revenue of US$63 billion to US$67 billion for the second quarter to next month.
It said that worldwide iPhone supply would be “temporarily constrained” as its manufacturing partners in China were only slowly ramping up work after being closed due to the virus.
Consumer demand in the Chinese market has also been dampened after all Apple stores were shut.
“Stores that are [now] open have been operating at reduced hours and with very low customer traffic,” the company said. “We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can.”
Asian markets tumbled yesterday after Apple warned the new coronavirus had hit output and demand in China, fueling fears over the wider impact of the epidemic on corporate earnings and economic growth.
Apple’s shares yesterday fell 4.1 percent in premarket trading in the US, while shares of its European suppliers fell in early trading.
“Best to buckle in as we could be in for a bumpy ride [over] the next few weeks,” AxiCorp Financial Services Pty Ltd chief market strategist Stephen Innes said.
“I’m struggling to find any research report that doesn’t suggest [COVID-19] could significantly affect short-term earnings,” he said.
Mirabaud Securities Ltd global thematic group cohead Neil Campling said that Apple’s warning threatens to open the “floodgates,” as the virus affects supply chains around the world.
“The semiconductor industry and supply chain is both complex and truly global,” Campling said in an e-mail to Bloomberg. “As we navigate through the rest of the quarter, we continue to see a high probability of there being a plethora of downward revisions.”
However, Goldman Sachs Group Inc analysts said that they see the impact from the virus as a “temporary issue” for Apple, even as they reduced their forecasts for the March and June quarters.
Supply chains of global firms such as Apple supplier Foxconn Technology Group (富士康) and auto giant Toyota Motor Corp have been disrupted as key production facilities in China were temporarily closed.
Fiat Chrysler Automobiles NV, Hyundai Motor Co and General Motors Co have said their auto production lines were, or could be, hit by Chinese factories that are slow to restart because of the virus.
Additional reporting by Bloomberg
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