Apple Reins in Q2 Guidance, Citing Coronavirus Impact on China Production, Demand
Apple reined in guidance for fiscal Q2 earnings Monday, saying the pace of return to normal work conditions in China after the extended Chinese New Year holiday is slower than anticipated. It didn’t provide a revised guidance range in its…
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investor update on the ongoing coronavirus situation. On its Jan. 28 earnings call, Apple guided (see 2001290026) to March quarter revenue of $63 billion-$67 billion. IPhone supply will be “temporarily constrained," said the company Monday. Though manufacturing partner sites, which have reopened, are located outside the Hubei province, “they are ramping up more slowly than we had anticipated.” The iPhone supply shortages will temporarily affect revenue worldwide, it said. In addition, demand for Apple products within China has been affected, and all Apple stores in China, plus many partner stores, have been closed. Those that are open are operating on reduced hours with “very low customer traffic.” Earlier this month (see 2002060054), Nikkei Asian Review reported that three AirPods suppliers were facing shortages of materials and components from coronavirus-forced plant shutdowns in China. The Feb. 7 report said suppliers had a maximum two weeks’ supply of components for assembly. Apple had ordered suppliers to produce up to 45 million units of the true wireless headphones in first half 2020 to keep up with surging demand, it said. Tuesday, Apple.com showed a delivery date of March 19 for AirPods Pro. The Monday update said Apple is “gradually reopening our retail stores and will continue to do so as steadily and safely as we can.” Apple's corporate offices and contact centers in China are open, and online stores have remained open, it said. The situation is “evolving"; the company will provide an additional update on its April earnings call. Shares closed down 1.8 percent Tuesday to $319.