- Apple has warned that it will unlikely hit its March quarter sales guidance announced 3 weeks ago due to the coronavirus epidemic in China
Apple has warned that it will unlikely hit its March quarter sales guidance announced 3 weeks ago due to the coronavirus epidemic in China. The coronavirus (COVID-19) has killed nearly 1,900 people in China and affected 72,000 people. As a result, millions of people have been told to stay in their homes. This severely disrupted supply chains and factories were also closed.
Even though the manufacturing facilities in China that build Apple’s iPhones and other devices, it is taking longer than expected to ship out the products. Plus a number of Apple’s retail stores in China just recently reopened, which means that there will be a negative impact on revenue due to the time that the stores were closed.
A few weeks ago, Apple was forecasting $63 billion to $67 billion in revenue for the quarter ending in March. And Apple warned that it was wider than normal due to uncertainty surrounding the coronavirus.
“The magnitude of this impact to miss its revenue guidance midway through February is clearly worse than feared,” said Wedbush analyst Daniel Ives in a note via Marketwatch.
It has been estimated that the coronavirus may cause a drop in demand for smartphones by half in the first quarter in China. Apple said it would provide more information in April when it is released in the first-quarter results.
And Wedbush said it is optimistic that Apple will be able to recover from the coronavirus setback.
“While trying to gauge the impact of the iPhone miss and potential bounce back in the June quarter will be front and center for the Street, we remain bullish on Apple for the longer term,” added Ives.
As sales of the iPhones dip, Samsung could benefit. Samsung manufactures a number of devices out of Vietnam and other countries. Apple is much more dependent on the contract manufacturers in China.
In a memo that Apple CEO Tim Cook sent to the staff, he said that the impact is temporary and the company is “fundamentally strong.”
“Our paramount concern is with the people who make up Apple’s community of employees, partners, customers, and suppliers in China. I also want to recognize the many people across our teams who have been working around the clock to manage Apple’s global COVID-19 response with diligence and thoughtfulness,” wrote Cook.