Apple on Monday issued a note that it would likely not hit its guidance for the second fiscal quarter of 2020, due to the coronavirus:
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.
To wit: 1) factories making iPhones that were closed have reopened, but production is ramping up only slowly, meaning units will be constrained; 2) all of Apple’s brick-and-mortar stores in China have been closed, as well as many of its partners.
This is the second time in two years that Apple has had to adjust earnings expectations—it did so in January of 2019 due in large part to currency exchange rates and phone launch timing. In both cases, the factors at play were difficult (if not impossible to predict), though this year’s outbreak is certainly even more complex.
Apple didn’t provide revised earnings estimates in its press release, as it did in 2019, but the company had previously issued guidance of between $63 billion and $67 billion in revenue.
Long term, this is probably not a big deal. Apple will be far from the only company impacted by this, and as the press release points out, it’s only a temporary disruption. But this is an unprecedented situation that’s already having significant repercussions throughout the tech community, such as the recent cancellation of the upcoming Mobile World Congress trade show. We’ll have to wait until April to find out just how much of a dent this made in the company’s earnings.