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Apple Issues Revenue Warning For Q1 Due To Coronavirus


02/18/2020


Apple Issues Revenue Warning For Q1 Due To Coronavirus
In what was the second time in about a year as well as in its entire history, a revenue warning for the current quarter was issued by the tech giant Apple. The company said revenues and profits for the first quarter is likely to fall because of disruption in supply and production due to the coronavirus outbreak in China and the subsequent closure of factories there. The last time the company issued a financial alert was also because of a slowdown in demand in China. 
 
The company said that it had assumed that factories would start manufacturing activities soon after the end of the holidays for the Lunar New Year in China starting February 10. However the company is now “experiencing a slower return to normal conditions than we had anticipated” which has forced the company to issue the warning that it might not be able to achieve the revenue target for the quarter as it had forecast at the end of January.
 
Analysts expect Apple stock s and those of other tech companies to take a hit because of this latest warning which would be a deviation from the present trend as investors had apparently not paid much attention to the possibility of a slowdown because of the coronavirus. Apple stock s traded near to their all time high after the company reported earnings for last year at the end January.
 
The company said one of the major factors for the revenue warning is because of a slowdown in manufacturing which means that the “worldwide iPhone supply will be temporarily constrained.”
 
Even though none of the production units of suppliers of Apple were based in the Hubei province in China – the region at the epicenter of the outbreak, the company said that the facilities that had resumed production were “ramping up more slowly than we had anticipated.”
 
Sales in China have also been hit because of a closure of its retail stores there and even though some stores were operational, they operated “at reduced hours and with very low customer traffic.” Last Thursday, Apple had announced that five of its stores in Beijing would be reopened by the end of last week but those would be operating for only seven hours each day instead of the usual 12 hours.
 
The people who were in-charge of production of the next iPhone, due to be released later this year, had been delayed for two weeks as they were to return to China and therefore the entire project has been delayed by a couple of weeks at least, said reports quoting people familiar with Apple’s manufacturing plans.
 
Sources also said that workers were finding it hard to return back to work because of the disruptions inside china such as travel and movement restrictions. Shortage of staff has hampered production in those plants that have reopened in China as many workers could not join work after the end of the holidays for the Lunar New Year.
 
(Source:www.ft.com)