Apple Inc (NASDAQ:AAPL) shares fell modestly on Tuesday after the tech giant became the first major US company to issue a trading warning due to the impact of the coronavirus on its supply chain and shops in China.
“Worldwide iPhone supply will be temporarily constrained," the tech titan said in a statement on Monday, having forecast revenues of US$67bn in the quarter to March.
The iPhone maker said that even though most of its manufacturing partners are based outside the area of the main outbreak of coronavirus in Hubei province, they have been affected and were ramping up to full production more slowly than expected.
All its stores in China are closed while open partner stores are running at reduced hours, Apple added.
Smartphones sales in China are forecast to halve in the first quarter due to the measures to contain the virus, though they have been reports that the number of new cases is starting to decline.
Investors to shrug off warning
Neil Wilson, chief market analyst for Markets.com commented; “Most of Apple’s products are made in China, while the country accounts for about 16% of global revenues.”
He added: "The $4bn spread in the original guidance was already as wide as a barn door, reflecting uncertainty at the time of the Q1 results at the back end of January.
“The warning points to the two key ways the outbreak will impact growth. First output: Apple says iPhone supply will be constrained due to a slower ramp in production following the late return following the new year holiday. Two, consumption: demand for all products in China has been sharply hit.”
Wilson concluded: “Apple warned about China a little over a year ago and after the stock initially sold off, investors soon shrugged it off.”
In early New York trading, Apple shares were down 2.4% at US$317.20.
-- Adds analysts comment, updates share price --