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Technology Apple says coronavirus hits home: iPhone sales hurt by impact in China

05:15  18 february  2020
05:15  18 february  2020 Source:   usatoday.com

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Apple has warned that disruption in China from the coronavirus will mean revenues falling short of forecasts. The iPhone maker is the first major US company to say The tech giant said production and sales were affected, and it was "experiencing a slower return to normal conditions" than expected.

The coronavirus outbreak, which is stopping travel in parts of China , could affect the supply and demand for Apple products expected to launch in the first half of 2020, according to TF Cook said on Tuesday that Apple had restricted employee travel in China except in business-critical circumstances.

Apple said Monday that the coronavirus is affecting the company more than it expected and is having an impact on manufacturing.

The company lowered its guidance for earnings in the current quarter.

"We are experiencing a slower return to normal conditions than we had anticipated," Apple said in a statement. "As a result, we do not expect to meet the revenue guidance we provided for the March quarter."

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(Reuters) - Apple Inc warned on Monday it was unlikely to meet a sales target set just three weeks ago amid lost production and weakening demand in China from That will mean fewer iPhones available for sale around the world, making Apple one of the largest Western firms to be hurt by the outbreak.

SAN FRANCISCO — Apple said on Monday that it was cutting its sales expectations because of the coronavirus Apple also said that demand for its gadgets in China had been hurt by the outbreak; it closed all of its Fears over the coronavirus ’s impact on the global economy have been growing.

Apple had said it expected to have sales of between $63 billion to $67 billion in the current quarter. Gene Munster, an investor and analyst with Loup Ventures, projects revenue of between $58 billion to $60 billion. Apple reported revenues of $91.8 billion in the holiday quarter, Apple's biggest of the year.

Daniel Ives, an analyst with Wedbush Securities, said the Apple announcement "just confirmed some of the worst fears on Wall Street."

The iPhones are assembled in China, and factories outside the Hubei province "are ramping up more slowly than we had anticipated," Apple said. The shortages will "temporarily" affect revenues worldwide.

Additionally, Apple's been hit with sales issues in China.

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Coronavirus is having an impact on the company's supply of its iPhones . Apple says smartphone production is ramping back up slower than expected. Apple says demand for iPhones is also down in China because many of Apple 's 42 retail stores there are closed or operating with reduced hours.

"Worldwide iPhone supply will be temporarily constrained," Apple said Monday. "While our iPhone manufacturing partner sites are located outside the Hubei province -- and while all of these facilities have reopened -- they are Apple could see some impact from coronavirus in China , Cook says .

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The Apple retail stores there are closed, and the retail stores that are open "have been operating at reduced hours and with very low customer traffic." Apple said it is gradually reopening its retail stores and will continue to do so "as steadily and safely as we can."

"Apple is fundamentally strong," the company said, "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."

Ives said Apple is getting hit harder from the virus than any other tech competitor. Samsung may produce more phones, but most are manufactured in South Korea and elsewhere in Asia. Companies such as Amazon and Facebook make hardware products in China, most notably the Shenzhen region, but Apple sells many, many more units of iPhones.

Apple is closing all mainland China stores due to coronavirus outbreak

  Apple is closing all mainland China stores due to coronavirus outbreak The coronavirus outbreak is having a tangible impact on the tech world, and Apple is serving as a textbook example of its effect. The company is closing all its retail stores and corporate offices in mainland China through February 9th out of an "abundance of caution" and in consultation from experts. Apple had initially closed three stores, but this shuts down a full 42 locations across the country. Key suppliers like Foxconn have said they don't expect problems meeting production goals for companies like Apple. Caution is still the order of the day, however.

It also said that store restrictions due to coronavirus precautions have affected its sales in China , with most retail stores either closed or operating at The disruptions follow a strong December quarter for iPhone sales , which were up for the first time in a year. The outbreak is expected to pile pressure on

Foxconn, Apple 's largest manufacturing partner in China , says everything is still on schedule despite the Wuhan coronavirus ' spread in China . Analysts have speculated that Apple , which manufactures nearly all of its iPhones in China , could be significantly impacted by the outbreak, though Foxconn

Munster said he believes Apple’s business will "eventually" return to normal in China and resume 5% plus revenue growth cadence.

"The low probability near-term risk is even though global demand is strong for Apple products, China needs to get back on its feet or the company will eventually not have adequate supply and risk losing sales. We believe greater than 60% of Apple’s revenue is somehow impacted by the China supply chain or manufacturing in the region," he said, in a note to investors.

Munster said he's been tracking iPhone availability in 13 countries and "have yet to see any measurable disruption in estimated shipping times." But he believes consumers will start seeing backlogs of products in the "weeks ahead."

By the end of 2019, Ives said, about 185 million iPhones sold, 65 million Apple AirPods, 60 million Amazon Echo speakers and 45 million iPads. All are manufactured in China. Samsung sold about 30 million units of the premium Galaxy S line of smartphones, Ives projected.

Apple is likely to release a budget-priced iPhone in March, a sequel to the SE, despite the virus, analyst Ming Chi-Kuo said Monday.

In September, Apple traditionally releases a line of premium iPhones. Ives said he doesn't think the launch will be slowed and business should be back up as soon as the spring.

But for now, "this is a tough pill for investors to swallow."

Follow USA TODAY's Jefferson Graham (@jeffersongraham) on Twitter

This article originally appeared on USA TODAY: Apple says coronavirus hits home: iPhone sales hurt by impact in China

Apple is closing all offices and stores in China through February 9th .
Will Apple’s iPhone factories close too?Apple is closing ALL stores, corporate offices, and contact centers in China due to Coronavirus through Feb. 9, company says in statement. https://t.co/E5xGkgAkeSpic.twitter.

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