Apple has warned that disruption in China from the coronavirus will cause its revenues to fall short in the current quarter, marking the second time in little over a year that weakness in China has forced the world’s most valuable technology company to issue a financial warning.
The US consumer tech company said that it had assumed that work would return to normal in China after the new year holiday that ended on February 10. Instead, it said it was “experiencing a slower return to normal conditions than we had anticipated”, leading it to warn that it will not meet the revenue guidance issued at the end of last month.
Apple’s warning will send shockwaves across Wall Street, which had already started to look past the continuing coronavirus crisis. Following its earnings report at the end of January, Apple’s shares have traded close to their all-time highs, valuing the company at more than $1.4tn as of Friday’s close.
The shortfall partly reflects a manufacturing slowdown that will mean that “worldwide iPhone supply will be temporarily constrained,” the company said.
None of the manufacturing plants run by its suppliers in China are in Hubei province, the centre of the outbreak. However, Apple said that other facilities, though reopened, were “ramping up more slowly than we had anticipated.”
It also said that store closures inside China had hit sales there, and that stores that were open were operating “at reduced hours and with and very low customer traffic.”