Apple Warns on Revenue Guidance – By Todd Horwitz, Bubba Trading

 

Apple on Monday warned that it expects to fall short of revenue goals in the current quarter because of the coronavirus outbreak, underscoring the far-reaching effects of the public health crisis on the global economy. In a statement to investors, Apple said that while factories in China were reopening, iPhone production in the country was ramping up more slowly than expected.

“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company said. “These iPhone supply shortages will temporarily affect revenues worldwide.” Demand for Apple products has also dampened in China, where all the company’s stores and many of its partner stores have shuttered, according to the statement. The stores that have remained open were operating on reduced hours “with very low customer traffic,” Apple said.

Fears over the coronavirus’s impact on the global economy and business have been growing. As of Tuesday morning in China, more than 72,000 people had been infected by the coronavirus and over 1,800 had died worldwide, officials reported. About three-quarters of a billion people in China are under some kind of lockdown orders, according to a New York Times analysis.
Apple’s action on 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.”

Apple, which is widely regarded as a bellwether of global supply and demand for goods, has bet big on China in recent years. Timothy D. Cook, the chief executive, worked with China’s telecom providers to introduce the iPhone in the country last decade. After that, Apple’s already substantial sales took off further. China is now the company’s second largest market after the United States.

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 percent 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
.
.

Todd “Bubba” Horwitz

Financial Markets and Political Commentary

 

Tags

, , , , , ,

Related Posts

About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.