The impact of coronavirus means Apple will not achieve its quarterly revenue target
Apple does not anticipate meeting its revenue predictions for the March quarter because of low work rates and little demand because of the outbreak of the new coronavirus in China.
The firm reported that the iPhone, which earns most revenue for Apple, has temporary constraints as a result of a ramping up in production more slowly than expected.
The company said in a statement on Monday that “resumption of work is beginning around the country; nevertheless, we are witnessing a minimal return to normalcy contrary to our expectations. Besides, there has been a reduction in the demand for iPhones since stores in China are shut or working within a short time frame, and with few clients, the firm reported.
Apple had predicted revenue of US$63 billion to US$67 billion for the second quarter accounting period at the close of March. According to data from Bloomberg, the average estimate of analysts was US$65.23 billion
When the company announced its guidance in January, it said expected factories to start reopening on February 10. However, the reopening process has been lackadaisical because factory employees and manufacturing stakeholders seek to mitigate the further spread of the virus, which has led to over 1,800 reported mortalities in china.
Gene Munster, a long-time Apple analyst, and Loup Ventures co-founder, said that " this is the good and the bad of being in China."
"They are the only companies having exposure to China, so they are solving the pain of what has been majorly successful for the companies in the previous decade." A California-based technology giant, The Cupertino, said that elsewhere apart from China," there have been strong sales of products and services as per their expectations."
Apple did not mention its March revenue predictions but that the condition is "changing." The firm indicates that it will provide more information in its call of April earnings.
Apple had plans of beginning the production of a new cost-effective iPhone in February, bringing it to the market as early as March. The impact of coronavirus on those plans is unclear.
The firm reported that although it did not achieve its guidance, all of its iPhone producing suites in the region are back in operations.
Besides the challenges facing iPhone, the firm reckoned its failure to sell products to retail and collaborating stores in China because of the disease. China accounts for the third biggest market for Apple in revenue terms and has 42 shops that shut for the better part of February.
A statement from Apple said that “open stores have been working for reduced periods and with very little flow of customers." We are slowly resuming operations in our retail stores, and we will progressively continue more safely as we can".
Apple reported that its centers of contact and its Chinese corporate offices are currently operational. It has a few open stores in China as well as Beijing, but restricted hours of operations.Source