Pricing & Plans

Apple to Suffer Impact of Spreading Epidemic in its March Quarter Sales

  18 Feb 2020        Business
Apple to Suffer Impact of Spreading Epidemic in its March Quarter Sales

On Monday, Apple Inc. said that it is unlikely that the company will meet its estimates March quarter sales guidance which was set three weeks ago due to the coronavirus epidemic which has largely affected the world’s most valuable technology.

The virus has spread rapidly killing nearly 1,900, affecting some 72,000 people in China, and confining millions to their homes. This epidemic in China has extended Lunar New Year holiday break which delayed the reopening of factories, disrupted its supply chains. Apple said that the Chinese production facilities that have manufacturers Apple’s iPhone and other electronics are reopening, however, it is ramping up more slowly than expected.

Also, its retail stores in the area are operating for fewer hours or have remain closed, hurting the sales further for this quarter. Last quarter, China accounted for $13.6 billion or 15% of Apple’s revenue and in the quarter last year supplied 18% of revenue. In January, Apple had forecast revenues estimates between $63 billion to $67 billion for the March quarter ending. On Monday, the company failed to offer new revenue estimate or a profit forecast.

Daniel Ives, Wedbush analyst, wrote in a note that the impact of this magnitude is clearly worse than fear. He further said that they are still optimistic that the brand will be able to recover from the virus setback. They will remain bullish on Apple for a longer term as the company will try to gauge impact of the miss and bounce back in the June quarter.

Norihiro Fujito, Mitsubishi chief investment strategist, said that if the company’s shares were traded cheaply than it might have not matter much. However, with its high trading record, investors will be tempted to sell.

The agreement producers of Apple have included a greater number of areas in China than outside, with significant provider Foxconn growing from 19 areas in 2015 to 29 out of 2019 and another provider, Pegatron Corp, going from eight to 12 areas, as indicated by information from Apple.