We’ve already discussed how the coronavirus outbreak has been impacting supply chains for a lot of tech companies, but now we have a rough idea of the financial impact involved. Recently, Apple sent out a note to investors warning that it won’t hit its revenue estimates in Q2, as the company expects to lose out on at least $4bn.
The update says that while the company made revenue estimates between $63bn and $67bn for Q2 on the 28th of January, Apple is experiencing “a slower return to normal conditions” than anticipated and as a result, the company no longer expects to hit even the lower end of its revenue estimate.
Apple says this is caused by two main factors, the first being a temporary constraint in the global iPhone supply chain. The key facilities that Apple partners with have re-opened in China but production is ramping up slower than hoped due to continued concerns around the coronavirus. Apple is donating to the public health effort to fight the virus but patience needs to be exercised while people unfortunately continue to fall ill and require treatment.
The second main factor is that demand for Apple products in China has obviously been affected. Many retail stores remain closed and those that remain open are “operating at reduced hours”, so a loss in sales is expected. Apple plans to update with more information in April during its next earnings call, at which point, we’ll know more about this evolving situation.
KitGuru Says: Apple shares did take a slight dip after this news but it is still in a strong position with a value of $320 per share. Of course, this is an unexpected situation that is having a global impact, so it is going to be significant for many other companies too, including the likes of Sony, which is cancelling event appearances, and Nintendo, which is facing Switch supply constraints.