Earlier this month Patently Apple noted in a report that "more than likely your big tech stock might get dinged in their next reporting period and it may take two more months before you could get your hands on Apple's popular new AirPods Pro. So what.
Take it in stride as every large company and government are trying their best to get this coronavirus beast under control so that all could get back to normal. Now is not the time to hype up stories about production delays while people are still dying in China and mayhem is leading to cities being closed to the outside world as our cover graphic illustrates."
Today, Apple announced that it would Miss its Q2 2020 Guidance
"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.
Our corporate offices and contact centers in China are open, and our online stores have remained open throughout.
Outside of China, customer demand across our product and service categories has been strong to date and in line with our expectations.
The situation is evolving, and we will provide more information during our next earnings call in April. Apple is fundamentally strong, and this disruption to our business is only temporary.
Our first priority — now and always — is the health and safety of our employees, supply chain partners, customers and the communities in which we operate. Our profound gratitude is with those on the front lines of confronting this public health emergency.
More information on these risks and other potential factors that could affect the Company’s financial results is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to further update its guidance for the second quarter ending March 28, 2020, or any other forward-looking statements or information, which speak as of their respective dates." For more, read Apple's full press release here.
Earlier today Patently Apple posted a report titled "TrendForce posts a comprehensive analysis of the Coronavirus on Global Tech & an Israeli Distributor says iPhone Supply is Dwindling." The report noted that in calendar "Q1 2020 smartphone production is projected to decline by 12% YoY, making it the quarter with the lowest output within the past five years."
The second part of our report illustrated how iPhone inventory in Israel was down to a trickle, a clear sign on production constraints issued by the Chinese government.
The writing was clearly on the wall, so it shouldn't come as any surprise to anyone that Apple will be the first of many who will be making the type of announcements in the coming weeks.
For young investors, now is not the time to panic and Apple's Executives have made in crystal clear that Apple is fundamentally strong, and this disruption to our business is only temporary.