Apple Analyst Cuts Shipment Expectations Over Coronavirus

The impact of the Chinese coronavirus continues to ricochet around the world, with an increasing chance of hitting the global economy. Multiple Chinese industry segments have warned that earnings might be impacted by the illness.

Now, Apple analyst Ming-Chi Kuo has said he expects the coronavirus to hit Apple iPhone shipments by as much as 10 percent due to decreased production caused by illness in China.

″Our latest survey indicates that the iPhone supply is being affected by the coronavirus and, therefore, we cut the iPhone shipment forecasts by 10 percent to 36-40 mn units in 1Q20,” Kuo said in a note on Sunday. Apple no longer reports how many iPhones it sells per quarter, but Kuo figures Q1 2019 shipments were about 38 million devices.

Apple had a massive Q4 to end out 2019, so it’ll head into 2020 in good shape no matter what. Tim Cook has already warned on the impact of coronavirus and he gave a fairly broad range for earnings, between $63B and $67B.

The impact of coronavirus on the world economy isn’t theoretical — it’s already happening. Axios reports that Starbucks, Levi Strauss, Disney, Apple, JP Morgan, and Google have taken various steps to shut down operations, halt production, or banning employee travel. China took steps to shut down stock market trading for certain companies on Monday after early opens were sharply negative, according to ForeignPolicy.com. The BBC writes that China will pump $16B into its economy to help stabilize the situation and to ease investor fears about the long-term impact of coronavirus.

Right now, thinking is split as far as how large the long-term risk is. Coronavirus is not particularly deadly, but it’s expected to have a larger impact on the Chinese economy than SARS did, partly because the economy is significantly larger now than it was then. MarketWatch says that compared with SARS:

‘[T]he Wuhan virus has hit ten years into a bull market for equities. With valuations no longer cheap, and in some cases a little stretched, investors are more likely to be looking for an excuse to sell rather than buy,’ Shearing wrote. ‘The potential for the virus to trigger a significant market correction is much greater now than it was back then.’

There have also been reports that existing antivirals and HIV drugs may be effective against this coronavirus, however, and the situation is still in the early days. Right now, it’s impossible to estimate how large or small the worldwide impact of the virus will be.

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