Coronavirus hits Apple; company to miss quarterly revenue target
Apple expects to fall short of March quarter revenue goals as the coronavirus outbreak in China constrains manufacturing, supply chains and retail.
The statement released Monday is likely to trigger dips in stock prices when the market reopens Tuesday after being idle for Presidents Day.
“Our quarterly guidance issued on January 28, 2020 reflected the best information available at the time as well as our best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on February 10,” Apple said in a statement published on its website. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated.”
Apple braced itself
During its earnings call in January, Apple projected March quarter revenues of $63 billion to $67 billion. The range reflected some uncertainty about the potential impact of the coronavirus, which was at the beginning stages of a national health crisis.
Most of the world’s iPhones are produced in China and the facilities Apple partners with are ramping up more slowly than they expected.
The demand for products in China also took a hit at travel restrictions and quarantines shut down many parts of the country, including all 42 Apple Stores. A handful of stores re-opened over the weekend with limited hours.
More than 1,700 people have died from the novel coronavirus, known as CORVID-19. More than 71,000 have been infected with the health crisis mostly affecting China.
The virus was reported in January as most Chinese citizens were abroad in their country for the Lunar New Year. Foxconn, Apple’s main manufacturer of iPhones, had shut down most of its factories. It quarantined workers in place in one facility in order to keep some production going.
Apple was far enough along in the production process to stay on schedule for the March announcement of a budget-friendly iPhone. Analysts, however, say Apple’s fall products and plans for 2021 would likely be stalled because of the spread of the virus.
In the statement Monday, Apple said it has more than doubled its contributions to health efforts in China.
“The situation is evolving, and we will provide more information during our next earnings call in April. Apple is fundamentally strong, and this disruption to our business is only temporary. Our first priority — now and always — is the health and safety of our employees, supply chain partners, customers and the communities in which we operate.
“Our profound gratitude is with those on the front lines of confronting this public health emergency.”