Great Britain

Apple hit by Coronavirus outbreak as tech giant admits deadly disease has caused iPhone shortages and low revenues

APPLE has confirmed fears around the impact the coronavirus pandemic is having on its sales and production.

The $205.5 billion mega-corporation is seeing its revenue blighted by the virus closing its factories and stores on top of already weakening demand by Chinese consumers.

Apple announced on Monday that it was cutting its sales expectations due to the effect that the coronavirus is having in China in a worrying forecast of how the virus will affect global business.

The iPhone maker relies heavily on the Chinese for factory labour and its consumer market.

It has confessed that the supply of smartphones would be hurt because production was ramping up more slowly than expected even though China has reopened its factories under new measures.

On the sales front, the giant was forced to close all 42 of its stores in the country last month. Only seven of them are now reopening but on reduced hours.

An Apple spokesman told investors: "Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated.

"These iPhone supply shortages will temporarily affect revenues worldwide," the company said, confirming predictions earlier this year.

In January, Apple forecast $63 billion to $67 billion in revenue for the quarter ending in March, ahead of estimates of $62.4 billion.

Analysts have estimated that the virus may slash demand for smartphones by half in the first quarter in China, the world's biggest market for smartphones.

Coronavirus has killed over 1800 people worldwide and infected over 73,000 to date.

The official figure is disputed however due to a renewed clampdown on free speech in the country leading some to believe that the real numbers are far higher.

The closure of factories in China, which make up 25 per cent of global factory labour, is having a massive impact internationally as many firms rely on them for making everything from phones to cars to clothing.

Countries importing to Chinese consumers and tourism have already reported suffocating financial growth.

There are fears that the crisis could cause Japan to fall into a recession and limit Europe’s already weak growth.

Fiat Chrysler Automobiles, Airbus and automakers like General Motors and Toyota have begun only limited production in recent days due to the shortage of Chinese parts.

The next signal of the virus’ impact is expected to come on Tuesday when Walmart is scheduled to report quarterly results.

Managing director of equity research at Wedbush Securities, Daniel Ives, told the New York Times: “Apple is heavily exposed. It confirms the worst fears that the iPhone impact was going to be more dramatic than expected.”

China is now Apple’s second-largest market after the United States.

Last month, Apple had forecast that its sales would rise 9 percent to 15 percent in the current quarter. At the time, Mr. Cook said it had provided investors with a wider than expected estimate range because it was uncertain about the rapidly spreading coronavirus.

The company is following government guidelines on where it can reopen stores and the hours they can operate.


Do you have a story for The US Sun team?

Email us at [email protected] or call 212 416 4552.