Apple Inc. (NASDAQ:AAPL) warns sales to fall short of target due to coronavirus impact
Apple Inc warned on Monday it was unlikely to meet a sales target set just three weeks ago amid lost production and weakening demand in China from the coronavirus outbreak.
The illness has killed 1,770 in China and stricken some 70,500 people, with millions of others confined to their homes and factories slow to reopen after the Chinese New Year holiday break was extended due to the virus.
Manufacturing facilities in China that produce Apple’s iPhone and other electronics have begun to reopen, but they are ramping up more slowly than expected, Apple said. That will mean fewer iPhones available for sale around the world, making Apple one of the largest Western firms to be hurt by the outbreak.
Some of its retail stores in the country remain closed or are operating at reduced hours, which will hurt sales this quarter. China accounted for 15% of Apple’s revenue, or $13.6 billion, last quarter, and supplied 18% of revenue in the year-ago quarter.
In late January, Apple had forecast $63 billion to $67 billion in revenue for the quarter ending in March. It did not offer a new revenue estimate nor provide a profit forecast on Monday.
“The magnitude of this impact to miss its revenue guidance midway through February is clearly worse than feared,” Wedbush analyst Daniel Ives wrote in a note.
Apple’s stock is expected to face a knee-jerk reaction on Tuesday, when Wall Street reopens after the Presidents Day holiday, Ives said.
Analysts have estimated that the virus may slash demand for smartphones by half in the first quarter in China, the world’s biggest market for the devices.
“The health and well-being of every person who helps make these products possible is our paramount priority,” Apple Chief Executive Tim Cook said in a statement released by Apple. It will reopen China stores “as steadily and safely as we can,” the company added.
Globally, supplies of iPhones will be limited as Apple’s manufacturers work toward operating plants at full capacity, the company said. It plans to provide more information in April, when it releases first-quarter results.
Wedbush said it remained optimistic that Apple would be able to recover from the coronavirus setback.
“While trying to gauge the impact of the iPhone miss and potential bounce back in the June quarter will be front and center for the Street, we remain bullish on Apple for the longer term,” Ives said.
The disruption follows a strong December quarter for iPhone sales, which were up for the first time in a year. That could provide an opening for mobile phone rival Samsung, which has invested in manufacturing capacity in Vietnam and elsewhere.
Apple’s contract manufacturers have added far more locations inside China than outside, with major supplier Foxconn expanding from 19 locations in 2015 to 29 in 2019 and another supplier, Pegatron Corp , going from eight to 12 locations, according to data from Apple.
In contrast, Samsung had signaled early in the U.S.-China trade war that it could meet U.S mobile phone demand without China production. Samsung is also far less exposed to China as an end market.
Fiat Chrysler, Hyundai Motor Co and General Motors Co have said their auto production lines were, or could be, hit by Chinese factories that are slow to restart because of the virus.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 339.29.
The projected lower bound is: 313.23.
The projected closing price is: 326.26.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 88.4318. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 60.52. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 11 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 78. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 16 period(s) ago.
Rex Takasugi – TD Profile
APPLE INC closed up 0.080 at 324.950. Volume was 29% below average (neutral) and Bollinger Bands were 28% narrower than normal.
Open High Low Close Volume___
324.740 325.980 322.850 324.950 20,028,448
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 321.24 300.92 237.36
Volatility: 27 27 29
Volume: 28,620,056 31,340,280 27,931,940
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
APPLE INC is currently 36.9% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of AAPL.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on AAPL.O and have had this outlook for the last 123 periods.