As the deadly novel coronavirus that originated in China was spreading panic worldwide, Tim Cook, Apple CEO announced that the company has closed one of its retail stores in the Asian giant and has restricted employees’ business travel to the country.
Cook said that the company is working very closely with its team and partners in the affected areas, and have limited travel to business-critical situations “as of last week”.
On Tuesday, Cook told analysts during the earnings call that “The situation is emerging and we’re still gathering lots of data points and monitoring it very closely. As Luca (Apple CFO Luca Maestri) had mentioned, we have a wider than usual revenue range for the second quarter due to the greater uncertainty. With respect to customer demand and sales, we’ve currently closed one of our retail stores and a number of channel partners have also closed their storefronts. Many of the stores that remain open have also reduced operating hours.”
He also added that “We’re taking additional precautions and frequently deep-cleaning our stores as well as conducting temperature checks for employees. While our sales within the Wuhan area itself are small, retail traffic has also been impacted outside of this area, across the country in the last few days.”
Apple registered double-digit growth for iPhones in mainland China in its fiscal 2020 first quarter that ended on December 28, 2019.
The company does have some suppliers in the Wuhan area – the epicenter of the coronavirus outbreak, according to Cook.
He said that “All of these suppliers, they’re our ultimate sources, and we’re obviously working on mitigation plans to make up any expected production loss. We’ve factored best thinking and the guidance that we’ve provided you.”
With respect to supply sources that are outside the Wuhan area, the impact is less clear at this time, he added.
Cook also added that “The reopening of those factories after Chinese New Year has been moved from the end of this month to February 10th, depending upon the supplier location, and we’ve attempted to account for this delayed start-up through our larger range of outcomes.”
Apple supplier Foxconn has warned employees who were in Taiwan for the Chinese New Year not to return to its Wuhan plant in China.
The AppleInsider reported that in addition to asking many employees to stay at home, the Taiwanese multinational electronics contract manufacturing firm has also enhanced employee health monitoring at the Wuhan factory.
According to Nikkei Asian Review, some five million Chinese jobs rely on Apple’s presence in the country, including those of more than 1.8 million software and iOS App developers.