Apple Says It Does Not Expect To Meet the Revenue Guidance For the March Quarter Because of the Coronavirus Outbreak (apple.com) 25
Apple said on Monday that it does not expect to meet the revenue guidance for the March quarter. In a press release, the company added: As the public health response to COVID-19 continues, our thoughts remain with the communities and individuals most deeply affected by the disease, and with those working around the clock to contain its spread and to treat the ill. Apple is more than doubling our previously announced donation to support this historic public health effort. Our quarterly guidance issued on January 28, 2020 reflected the best information available at the time as well as our best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on February 10. Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors. The first is that worldwide iPhone supply will be temporarily constrained. While our iPhone manufacturing partner sites are located outside the Hubei province -- and while all of these facilities have reopened -- they are ramping up more slowly than we had anticipated.
The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues. These iPhone supply shortages will temporarily affect revenues worldwide. The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic. We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can.
The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues. These iPhone supply shortages will temporarily affect revenues worldwide. The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic. We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can.
Coronavirus prefers Android? (Score:2)
Could be.
Re:Coronavirus prefers Android? (Score:5, Insightful)
More like "Android" isn't a monolithic entity, but is rather a group of companies who have adopted it, which in China is Huawei, Vivo, Oppo, Xiaomi, and Meizu, in that order. You might have guessed from their names that they aren't exactly subject to the same US-based laws that required Apple to issue the revenue guidance it just did. Moreover, even if they were, China's culture of saving face that drove much of the early misinformation regarding the virus and its spread would lead these companies to downplay its impact on their businesses.
Apple says that the reasons for their slowdown are because:
1) Supply is decreased because fewer workers returned after the Lunar New Year than they had anticipated.
2) Demand is decreased because fewer people are getting out to visit retail stores than they had anticipated.
Both of those are lower than what was anticipated just a few weeks ago when they issued their last revenue guidance, suggesting that the situation over there is getting worse before it gets better, and there's no reason to believe that the Android manufacturers (especially those with factories near Wuhan) aren't similarly impacted. The fact that we haven't heard anything from them would suggest one of the following: (A) they aren't talking, (B) their revenue being down simply isn't newsworthy over here, (C) their guidance was already low enough to account for the virus' impact.
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Re: Coronavirus prefers Android? (Score:2)
One virus likes another.
Ever notice it is always someone else's fault? (Score:1)
As the saying goes, success has many parents, but failure is an orphan.
Nobody says "we didn't meet our goals because we suck". They always give an external reason.
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Re:Ever notice it is always someone else's fault? (Score:5, Informative)
Given that:
1) Their previous guidance was given just two weeks ago at a quarterly meeting
2) That they confirmed their guidance remains accurate for other regions
3) That—other than the spread of the virus—nothing for Apple has changed in the last two weeks (e.g. no product launches, no PR disasters, etc.)
Yeah...I think it's safe to say that the virus is mostly to blame for this.
Also worth noting, this is only the second time since 2002 that Apple has reduced their revenue guidance. In general, Apple underpromises and overdelivers onits guidance, so they rarely need to make these sorts of announcements. Moreover, it's in their best interest to get them right the first time since it's not a good look to have to revise things down.
We have every reason to believe that they'd have adjusted their previous guidance accordingly if they had the information two weeks ago that they have today. That they're issuing new guidance now suggests that new information has either come to light that wasn't available at the time (which is very possible, given how much covering up has been going on within China about the spread of the virus) or that—as they suggest—the societal impact ended up being larger than they anticipated, since people seem to be staying at home far more than they usually do after the Lunar New Year. That people are doing so is affecting both their supply (fewer factory workers) and demand (fewer retail shoppers).
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Lots of other tech production line ready nations could have been used.
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I heard a group of shadowy pangolins and bats were taking credit for eating the apple.
Samsung on the other hand: (Score:4, Informative)
Where Are Samsung Products Manufactured?
Samsung has manufacturing plants in many countries. Samsung Galaxy phones are manufactured in Gumi, Korea. Some Samsung televisions, mobile phones, refrigerators, washing machines and split air conditioners are produced in a manufacturing facility in Noida, India, and a second Indian factory opened in 2007.
In 2014, Samsung began manufacturing computer memory modules in China. There are two semiconductor facilities: one in Austin, Texas and one in Giheung, Korea. A manufacturing facility and a research and development center are located in Warszawa, Poland. Televisions are made in Portugal, England and the U.S. A third manufacturing facility is planned to be built in Vietnam in 2014.
I guess there is some value in diversifying your manufacturing...
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Samsung isn't as affected because they don't sell any phones in China to begin with.
While there is a supply side to this issue as well, this is mostly a demand-side issue for Apple, and if you check the marketshare numbers for China [counterpointresearch.com], you'll see that Apple has roughly 8%, whereas Samsung's share is so low that they're only included as "Others" (which are cumulatively at 6%). Samsung can't lose sales that they never had in the first place, whereas Apple is getting hit hard right now because Chinese consumers
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whereas Apple is getting hit hard right now because Chinese consumers are staying home instead of going into public, crowded places where the virus could easily spread...such as the malls and shopping centers where Apple stores are located.
A lot of people are also not working right now, and won't have disposable income for some time after things recover. Debt is skyrocketing.
Interesting to watch (Score:2)
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When things on the production site get back to normal, there will be lots of demand from outside China waiting. There will probably some well-paid overtime in the factories until the number of products sold is back to the originally planned level.
The only problem is customers in China. They will also have lost income, so I expect all their phone purchases will be somehow delayed.
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Investors will now react hysterically, as usual
People usually don't react hysterically.
He's correct that Investors will act hysterically, for a number of reasons. The stock market does not often act in a sane fashion.
Re: Interesting to watch (Score:1)
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There will probably some well-paid overtime in the factories until the number of products sold is back to the originally planned level.
This supposes that their workers were already working less than the optimal number of hours. If it turns out that they already had reduced efficiency because of long hours, then there would be no extra pay expected, or extra capacity available, and instead of extra pay it would just result in backorders.
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Workers not a work? How quickly can skilled workers be found? Replaced?
Are all needed parts flowing in at 100% too?
I'm not gonna get my weekly number of steps in (Score:2)