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Tuesday, March 31, 2020

Apple warns that Coronavirus will hurt revenue

Apple also said that demand for its devices in China had been hurt by the outbreak; it closed all 42 of its stores in the country last month and most have yet to reopen.

By: New York Times | San Francisco | Updated: February 18, 2020 7:57:34 am
Apple, Coronavirus, Apple stores China, Apple store China shutdown, Apple production China, Apple iPhone production Coronavirus, Apple Coronavirus impact Apple, which is widely regarded as a bellwether of global supply and demand for goods, has bet big on China in recent years. (File)

Written by Daisuke Wakabayashi

Apple on Monday became one of the first companies to reveal how the coronavirus that has gripped China was affecting its business, saying it was cutting its sales expectations for this quarter, which a month ago it had projected to be robust.

The iPhone maker, which is highly dependent on Chinese factories and Chinese consumers, said in a statement that its supply of smartphones would be hampered because production was ramping up more slowly than expected as China reopened its factories. Apple also said that demand for its devices in China had been hurt by the outbreak; it closed all 42 of its stores in the country last month and most have yet to reopen.

“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” said Apple, one of the world’s most valuable public companies.

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Many global firms rely on factories in China to manufacture goods as varied as socks and laptop computers. And Chinese consumers, who had ridden a wave of rising wealth, had been avid buyers of luxury goods, iPhones and many other items.

Apple’s action Monday “is the first of many we’re going to see around the coronavirus impact,” said Daniel Ives, managing director of equity research at Wedbush Securities. “Apple is heavily exposed. It confirms the worst fears that the iPhone impact was going to be more dramatic than expected.”

Also Read | Apple extends store closures in China over Coronavirus

Apple, which is widely regarded as a bellwether of global supply and demand for goods, has bet big on China in recent years. Tim Cook, the chief executive, worked with China’s telecom providers to introduce the iPhone in the country last decade.

Apple also assembles most of its products in China. Foxconn, the Taiwan company that makes iPhones and other gadgets on behalf of Apple and global electronics companies, has declined to detail which plants have reopened since the Lunar New Year holiday ended but denied a media report that it was aiming to reach 50% production levels by the end of this month. None of the factories that make iPhones are in Hubei province, the center of the coronavirus outbreak.

The next signal of the virus’ impact is expected to come Tuesday, when Walmart is scheduled to report quarterly results.

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