Apple Signals Coronavirus’s Threat To Global Businesses

Home » Apple Signals Coronavirus’s Threat To Global Businesses

On Tuesday, Shares of Apple fell 2 percent and dragged the stocks of its suppliers across the globe lower, after the iPhone maker warned of lower sales in the current quarter acknowledging that the coronavirus outbreak was pressuring its supply chain. The drop in Apple’s stock is set to wipe nearly $30 billion off its market capitalization, just as it was inching closer to $1.5 trillion in value. The stock was trading down at $318.74.

Several Wall Street brokerages dubbed Apple’s update forecast as a “near-term headwind,” saying the company is working strongly outside China and the launch of 5G phones later this year would further boost sales.

Analysts at Piper Sandler wrote in a client note that “We believe any material weakness in Apple shares as a result of the March 20 quarter revenue shortfall will prove to be a buying opportunity. The iPhone supply constraints in the current quarter could result in pent-up demand for future quarters.”

In late January, Apple had forecast $63 billion to $67 billion in revenue for the quarter ending in March. The company did not provide a new revenue estimate or a profit forecast on Monday.

Venture capital firm Loup Ventures expects March quarter revenue to be in the range of between $58 billion and $60 billion, with a 12 percent contribution from Greater China.

Apple said on Monday that manufacturing plants in China that produce Apple’s iPhone and other electronics have begun to reopen, but they are ramping up more slowly than expected. That will mean fewer iPhones available for sale.

Cowen analysts estimated that one of the primary iPhone manufacturing facilities in China is operating at a 25 percent factory utilization rate as many workers remain absent.

“We believe utilization rates will improve linearly over the next several weeks to ~50 percent by mid-March and followed by a big improvement in late March to normal levels.”

Shares of Apple suppliers Taiwan Semiconductor, Intel, Broadcom, Qualcomm, Texas Instruments, Micron Technology, Microchip Technology, and Qorvo, fell between 1 percent to 3 percent in premarket trading.

Shares of European chipmakers Dialog Semiconductor and STMicroelectronics NV were down in the low single digits and Asian supplier Foxconn was down marginally.

Source: https://gadgets.ndtv.com/mobiles/news/coronavirus-threatens-apple-supply-chain-sales-2182261

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