Apple had anticipated turmoil from the new corona virus – but still announced a significant increase in sales this quarter. However, the group now admits that the forecast cannot be met.
Apple will miss its sales forecast for the current quarter, just a few weeks old, due to the Corona virus outbreak in China. There are supply bottlenecks for iPhones because production in China is ramping up more slowly than planned, the company said.
In addition, sales of Apple devices in China have recently been subdued, as many stores – and also the company's stores – were temporarily closed and had been poorly visited.
For these reasons, Apple will miss the sales forecast for this quarter made only at the end of January. At that time, Apple had already given an unusually wide range of $ 63 to 67 billion (€ 58.1 to 62.8 billion) with reference to coronavirus risks. There was no new forecast now. The restrictions on the business are only temporary, the group emphasized. Apple had $ 58 billion in revenue in the prior-year quarter.
iPhone supply bottlenecks temporarily depress sales
The factories of Apple manufacturers such as Foxconn and Pegatron as well as the most important suppliers are located outside the province of Hubei, which is particularly affected by the new lung disease Covid-19. In China, however, the traditional Chinese New Year holidays were extended elsewhere to avoid spreading. All production plants were running again. But: “The iPhone supply bottlenecks will temporarily affect sales worldwide.”
The situation is in flux – and more information on the effects on Apple business should only be available with the figures for the current quarter in April. Employee health is a priority, Apple CEO Tim Cook wrote in an email to the workforce published by Bloomberg financial services.
It's the second time in a year that Apple has had to drop a sales forecast – most recently it was for the Christmas quarter of 2018, when Apple blamed the slowdown in the Chinese economy for weaker-than-expected iPhone sales.
Apple is not the only electronics provider to be affected by coronavirus episodes. Nintendo warned of bottlenecks in its Switch game console at the beginning of February because some components from China were scarce.
Apple had spoken of production disruptions in January. Some suppliers are located in the particularly affected region around the city of Wuhan. But there are alternative sources for their products, said CEO Tim Cook at the time. At the same time, he also admitted that development in other parts of the production chain is difficult to predict. Investors took Apple's warning calmly: The stock was barely changed in Monday's after-hours trading in the US.