Apple says it is unlikely to hit its previously given quarterly guidance amidst the Coronavirus emergency in China

on Feb 18, 2020
Updated: Mar 11, 2020
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  • Apple says it is unlikely to hit its previously given quarterly guidance amidst the Coronavirus emergency in China.
  • 15% of Apple's revenue was attributed to China in the last quarter.
  • Apple's Asian suppliers lost traction in the stock market following the statement.
  • Experts anticipate an around 50% decline in smartphones' demand in China in the current quarter.

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In
its announcement on Monday, Apple highlighted that it is expected to miss its sales
guidance that it gave only 3 weeks ago for the current quarter. One of the most
valuable technology companies
across the globe also said that the recent
outbreak of Coronavirus in China has cast the strongest impact on its business
operations.

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The
coronavirus death toll is currently at around 1,900 in China while another
72,000 people are reported to have been infected. The health emergency has
caused excessive delays for businesses to return to normal after the Lunar New
Year holidays that were previously extended in an attempt to contain the virus.
The catastrophe has also sabotaged businesses’ supply chains.

15%
Of Apple’s Revenue Was Attributed To China In The Last Quarter

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Apple
also accentuated on Monday that its production houses in China are slowly
starting to return to operations, however, the return is significantly slower
than expected. The slowdown will lead to fewer iPhones and other Apple devices
available for sale across the globe, that will translate into worse than expected
performance in the current quarter.

The
last quarter had attributed 15% of the tech giant’s revenue ($13.6 billion) to
China versus an even higher 18% in the same quarter last year. With many of
Apple’s retail stores refraining from returning to business while others
operating only for a reduced number of hours every day, Apple’s performance is
now expected to take a massive hit amidst the Coronavirus crisis.

Last
month, Apple had forecast its revenue for the quarter that ends in March to
fall between the range of $63 billion to $67 billion. The company acknowledged
the wider range than it normally forecasts and attributed it to the uncertainty
of how hard will the Coronavirus outbreak hit its operations. While the company
said it is likely to miss the forecast, new guidance for profit and revenue was
not announced on Monday.

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Prices For Apple’s Asian Suppliers Slumped Following The Statement

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Apple
currently has a market capitalization of $1.4 trillion. Following Presidents
Day holiday when Wall Street reopens on Tuesday, the tech firm is likely to see
a torrid
reaction in the financial market.

The
impact of Apple’s statement was apparent in the stocks of its suppliers in
Asia. Samsung Electronics was seen trading 2.4% lower, SK Hynix lost 3.3% in
the stock market, while Taiwan Semiconductor Manufacturing was down 1.8%.

China
is the largest market for smartphones. With Coronavirus weighing heavily on
sales, experts anticipate the smartphones’ demand to go down by 50% in current fiscal
quarter in China.

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