By Chand Bellur
February 21, 2020 at 10:58 p.m. PDT
- Apple will once again revise estimates of revenues and device sales due to the impact of coronavirus on manufacturing.
- Although coronavirus seems to be contained, plant and retail closures have affected Apple’s revenues.
- Apple will provide updated information about the financial impact of coronavirus in their April earnings report.
Apple to Issue Update on Quarterly Guidance
Apple issued a press release on Tuesday, revising quarterly guidance amid the coronavirus outbreak. The release emphasizes that their original guidance was based on the information available at the time. The Chinese government made some efforts to contain knowledge about the severity of the outbreak, complicating Apple’s efforts.
Apple has fully cooperated with the Chinese government, shuttering all 42 of its retail locations. Manufacturing partner Foxconn also closed factories for some time. As the outbreak has become more manageable, most Apple stores have reopened and manufacturing is slowly starting to ramp up.
The company has gone so far as to donate money and resources to combat the spread of coronavirus in China. Despite all of these efforts, getting back on track has proven difficult for the Cupertino company:
The situation is evolving, and we will provide more information during our next earnings call in April. Apple is fundamentally strong, 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. Our profound gratitude is with those on the front lines of confronting this public health emergency.
Apple Stock Declines on Revised Earnings Outlook
Although revised numbers are not yet in, coronavirus fears have taken a toll on Apple stock. The stock dropped sharply on Monday, only to be temporarily buoyed by the press release. As of today, Apple shares are trading at even less than Monday’s lows.
It’s not just coronavirus that may dampen Apple’s meteoric stock price. The company has been using repatriated funds to buy back stock at record levels. The Trump administration’s lowering of the corporate tax rate simply enabled most corporations to buy back stock. The hope that it would increase hiring didn’t pan out, and the lack of tax revenues has doubled the federal budget deficit over the past year.
Apple has a bright future. The coronavirus may have a short term impact, however, the disease is less deadly than the flu. The effort to contain the virus is motivated by the will to save lives. If the flu and coronavirus are both circulating throughout the world, the global death toll will more than double. It’s also possible that contracting either disease could lead to infection with both pathogens. It’s the synergy of flu and coronavirus that has world health authorities motivated to stop the disease. Progress is being made and life is expected to get back to normal soon.