Apple is latest coronavirus casualty

Apple has warned investors it will miss sales targets for its current, March-ending quarter because the outbreak of coronavirus has hit supply and demand in China.

In an investor update, the company said worldwide iPhone supply would be "temporarily constrained" because manufacturing facilities that have now re-opened are "ramping up more slowly than we anticipated."

Demand has also been affected within China, where its own stores and those of many partners have been closed, Apple went on to say. Stores that have reopened appear to be operating at reduced hours and with low levels of customer traffic.

"We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can," said the company. "Our corporate offices and contact centers in China are open, and our online stores have remained open throughout."

Apple had previously been expecting to make between $63 billion and $67 billion in revenues for its second quarter after reporting record results for its December-ending quarter at the end of January. It did not provide a new forecast in its latest update, indicating simply that it did "not expect to meet the revenue guidance we provided for the March quarter."

Analysts commenting on Twitter said the update proved the coronavirus was hurting the technology sector. "If anyone had any doubts about the impact of COVID-19 coronavirus, then this updated guidance from Apple should be of concern," said Ben Wood, an analyst with CCS Insight. "Further evidence the impact is running deeper than some initially thought."

Others say it is likely Apple will be able to make up for the shortfall in the subsequent June-ending quarter when the spread of the virus has been contained and demand picks up.

According to the latest reported figures from China, some 1,868 people have now died from the respiratory disease out of 72,436 who have been infected. While the total number of infections recently spiked, after China introduced new medical checks, the infection rate is reported to have fallen.

Apple's update came days after network equipment maker Ericsson said it had been able to mitigate the impact of coronavirus by ramping up production at a facility outside China. The Swedish vendor's own Chinese plant in Nanjing reopened last week and has since been operating at capacity, said Fredrik Jejdling, Ericsson's head of networks, during an interview with Light Reading.

"We have been quite careful about being able to supply customers both geopolitically and to have resilience in our supply chains if these kinds of event happen," said Jejdling.

Despite the warning from Apple, some commentators say the reaction to coronavirus has been irrational. "As Apple and other companies report huge losses from 'the virus' let's take a moment to consider how much of it is irrational hysteria of a new disease when the boring flu always kills far more," tweeted David Carroll, an associate professor at Parsons School of Design in New York.

For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.

Concern about coronavirus last week prompted the cancellation of Mobile World Congress, the telecom industry's biggest trade show, after numerous exhibitors pulled out of the event.

Reports indicate that various other events have also been called off due to coronavirus, including Cisco Live, which had been scheduled for early March in Melbourne, and the global marketing conference Facebook planned to host in San Francisco next month. Cisco Live was expected to attract more than 8,000 visitors, while Facebook was anticipating 4,000 in San Francisco.

Outside the telecom sector, Swiss watchmaker Swatch has canceled its Time Move summit and the Kingpins denim trade fair in Hong Kong has also been called off, reports the BBC.

Related posts:

Iain Morris, International Editor, Light Reading

Be the first to post a comment regarding this story.
Sign In