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Apple said Monday that the coronavirus is affecting the company more than previously thought 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.”
Daniel Ives, an analyst with Wedbush Securities, says the Apple announcement “just confirmed some of the worst fears on Wall Street.”
The iPhones are assembled in China, and factories located 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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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 says 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 like Amazon and Facebook make hardware products in China, most notably the Shenzhen region, but Apple sells many, many more units of iPhones.
For the end of 2019, Ives says some 185 million iPhones sold, to 65 million Apple AirPods, 60 million Amazon Echo speakers and 45 million iPads. All are manufactured in China. Samsung sold some 30 million units of the premium Galaxy S line of smartphones, Ives projects.
Apple is expected to release a new, budget-priced iPhone in March, a sequel to the SE, which noted analyst Ming Chi-Kuo said Monday was still on, despite the virus.
In September, Apple traditionally releases a new line of premium iPhones. Ives doesn’t think the launch will be slowed down and says 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
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