BackApple to not meet quarterly guidance due to coronavirus outbreak in China
Apple said it does not expect to 'meet the revenue guidance' provided for the March quarterThe company had said, after the outbreak, that it will be watching the situation in China closely
PremiumIn perhaps the biggest sign of the impact of the coronavirus outbreak in China on the electronics sector, Apple today changed its quarterly guidance for the current quarter. In a notice to investors, the company said that though “work is starting to resume around the country (China)," things are slower than normal.
As a result, the company said it does not expect to “meet the revenue guidance" provided for the March quarter in its earnings call on January 28, 2020. The company had said, after the outbreak, that it will be watching the situation in China closely.
Apple, one of the biggest publicly listed companies in the world and the first US-based company to hit a trillion dollar market cap, is heavily dependent on China for its product. The companies iPhones are made in China, as are its other products, including the iPad tablets, Homepod smart speaker, Airpods and more.
Experts have also said that the pandemic could lead Apple to increase prices of iPhones, even in India. In an interview with Mint earlier, Adwait Mardikar, research analyst at Canalys, told us that iPhones that are fully imported from China may see a price hike in India due to shortage in supplies from the country. Even the phones that Apple assembles in India, like the iPhone SE and iPhone 6S, may see hikes because components are those are also sourced from China.
The coronavirus outbreak is expected to affect the entire electronics industry and may even bring manufacturing in India to a standstill. According to stakeholders in the industry, over 80% of components used to assemble phones in India are sourced from China, meaning that supply shortages there will make it impossible to “make" products in India too.
For other electronics, Arjun Bajaj, CEO of Daiwa (a television manufacturer) told Mint in an earlier interview that price hikes aren’t out of question right now. The impact of the outbreak and subsequent shutdowns in China was controlled originally since companies dependent on China but extra stocks for this quarter due to the Chinese New Year holidays at the end of January. However, those products are starting to run out and manufacturers in China have either not reopened or are functioning at 20-30% capacity, according to Rajesh Goenka, Director, Sales and Marketing, who spoke to Mint for a story on this matter a few days ago.
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