Apple

Apple Issues Quarterly Guidance Update due to Coronavirus

Apple to miss quarterly guidance & iPhone sales estimates

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Apple has announced that it doesn’t expect to meet the quarterly revenue guidance it shared on January 28 due to the ongoing Coronavirus outbreak.

Apple forecast sales of around £51.6bn for this quarter, however, the company has not revealed the hit it could suffer due to the ongoing coronavirus epidemic.

Most of its stores in China are either closed or operating reduced hours meaning sales would be much lower.

Apple said in a statement:

Our quarterly guidance issued on January 28, 2020 reflected the best information available at the time as well as our best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on February 10. Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.

The first is that worldwide iPhone supply will be temporarily constrained. While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated. The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues. These iPhone supply shortages will temporarily affect revenues worldwide.

The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic. We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can. Our corporate offices and contact centers in China are open, and our online stores have remained open throughout.

Apple was forecasting revenue for the second fiscal quarter between $63 billion and $67 billion for the first fiscal quarter of 2020, with gross margin pegged between 38% and 39%. Operating expenses were expected to hit between $9.6 billion and $9.7 billion, while a tax rate of approximately 16.5% is anticipated.

At the time, Apple said it gave a wider than normal range because of the then-new coronavirus epidemic. Apple has not currently provided a new revenue guidance range, and based on the commentary Apple has issued so far, it may not.

Apple says the situation is evolving, and that the company will provide more information during their 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.

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