Coronavirus Likely to Stymy Apple’s Growth; Launches | TechTree.com

Coronavirus Likely to Stymy Apple’s Growth; Launches

The company announced that iPhone supplies could be constrained and that new product launches could get delayed

 

Apple has effectively invalidated the earnings forecast that it shared in January with a new announcement that forewarns of a supply constraint of iPhones in the coming months due to the coronavirus outbreak with speculation also rife that some of the products lined up for launch next month may get delayed.

The Cupertino-based tech giant issued a guidance statement said “work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.”

In addition, the company is also experiencing a decline in retail demand across China with many official and third-party stores shutting down in the wake of the coronavirus outbreak. Those that are open have reported reduced traffic volumes with normalcy returning rather slowly in the affected regions.

The statement said that Apple’s manufacturing partner sites were located outside the Hubei province and had now started functioning though the production ramp-up is happening at a slower pace. “We are working in close consultation with our suppliers and public health experts as this ramp continues,” the note says.

In fact, during the company’s last earnings call on January 28, Apple had given a broader guidance range due to the health crisis in China but with the latest update, things appear to be getting worse than the prediction. Which is probably the reason the latest note clearly specifies that the China crisis would “temporarily affect revenues worldwide”.

Meanwhile, a report published in GSMArena.com suggests that the Apple event that was expected in mid-March is now getting pushed to the latter half of the month with sales of the new entry-level iPhone (reportedly called the iPhone9) also getting extended to the first week of April.

Another report by wire agency Bloomberg quotes insiders to suggest that while the new iPhone model could still be on track for a launch in March, the same may not be the case with the new iPad Pro models, which may get postponed due to the production cutbacks in China over the coronavirus epidemic.

This is the second time in two years that Apple has had to cut its revenue forecasts due to events related to China, the first happened last year during the Sino-US economic cold war. These events have led analysts to question the over-reliance of Apple on China for the production of its iPhones – something that CEO Tim Cook orchestrated upon taking over the company in the late 1990s.

 


TAGS: Apple, iPhone9, iPad Pro, Production, coronovirus

 
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