Apple shares swoon after coronavirus warning
'A slower return to normal conditions than we anticipated'
Apple shares slid ahead of Tuesday’s opening bell after the iPhone-maker warned that fallout from the coronavirus will crimp quarterly sales.
The uncertain outlook pressured suppliers in Asia and Europe, with TDK Corp. and Dialog Semiconductor both down more than 4 percent, and illustrated the wide-ranging economic fallout from the outbreak, which originated in Wuhan, China, and has sickened at least 72,436 people in the country while killing 1,868. The government has locked down more than 60 million people to curb the spread of the disease, and businesses from amusement parks to casinos, airlines and luxury retailers have taken hits.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAPL | APPLE INC. | 237.33 | +2.40 | +1.02% |
“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” Cupertino, California-based Apple said in a statement. “As a result, we do not expect to meet the revenue guidance we provided for the March quarter.”
The iPhone maker previously predicted sales of $63 billion to $67 billion from January through March, its fiscal second quarter. The range was wider than usual due to uncertainty related to the coronavirus outbreak.
CORONAVIRUS INFECTS LUXURY SPENDING AT LOUIS VUITTON, RALPH LAUREN
Apple, which did not provide updated guidance, said both iPhone supply and consumer demand have been temporarily impacted by the outbreak.
Foxconn, which produces about half of China’s smartphone exports, including the iPhone, has reportedly restarted 10 percent of its operations but has pushed back against reports that it would return to 50 percent capacity before the end of February.
FILE - In a Feb. 14, 2020 file photo, employees wear face masks as they stand in a reopened Apple Store in Beijing. (AP Photo/Mark Schiefelbein, File)
New York-based analysts at Nomura Instinet warn “Foxconn’s own buffer inventory of components – high pre-Lunar New Year – may run down in March.”
Meanwhile, Apple’s retail stores, which were originally scheduled to open on Feb. 10, remain closed across much of the country though they have begun to resume operations in Beijing and Shanghai. About 17 percent of Apple’s sales come from China.
The Nomura analysts consider Apple’s supply challenges as the “gating constraint on near-term results,” and believe production in the second quarter may reach only two-thirds of the company’s target.
A recovery in the third quarter “seems likely,” they added, but the “slope of the recovery remains quite uncertain.”
CLICK HERE TO READ MORE ON FOX BUSINESS
Apple shares have had a strong start to 2020, rising 10.7 percent this year through Friday, outperforming the Nasdaq Composite’s 8.5 percent gain.