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Analysts at Wedbush Securities said Saturday that Apple’s decision to temporarily close its stores in China due to the new coronavirus could delay the sale of approximately 1 million iPhones.
However, analysts added that the decision is unlikely to impact the company’s revenue.
“We believe with the limited transportation in principal cities across China and decreased foot movement in Beijing, Shanghai, and other major cities that at most ~ 1 mm iPhones in the region could be in danger of shifting out of the March quarter into the June quarter if the situation continues until late February,” analysts Strecker Backe and Daniel Ives expressed.
Ives and Backe further wrote that their predicted figure represented fewer than 3% of yearly Chinese iPhone sales and that the effect would likely be negligible.
Earlier in the day, Apple revealed that it would shutter its stores on China’s mainland until February 9 out of “an abundance of caution and based on the recent advice from primary health experts.”
The America-based technology company reported on blowout earnings on Tuesday. Still, it delivered guidance with a broader range than is typical, which CEO Tim Cook associated with uncertainty around the new flu-like infection, the coronavirus.
The company has wider exposure to the Chinese consumer market and depends on the country for a greater percentage of its manufacturing.
Ives and Backe described that the impact of the epidemic on Apple’s shares was softened because the company didn’t raise its major sales around the Chinese New Year, which occurred on January 25.
“While the new coronavirus epidemic is a sad situation and threatening headline for investors, for the stock, we believe the chief effect from this issue on Apple’s top-line is near negligible, particularly as this year there were no key price cuts or last-minute trades around the Chinese New Year, which we have eyed in preceding years to spur sales in the major area,” Ives and Back addressed in their writing.
Last quarter, Apple announced revenue of $91.8 billion, beating its own approximations. Growth was driven largely by roughly $56 billion in iPhone sales, even as the company missed appraisals for service revenue.
So far, more or less than 12,000 cases of the new coronavirus have been confirmed worldwide, and the death toll has climbed to 259 as of Sunday morning.
Many multinational businesses have fully or partly suspended operations in China and restricted workers from travelling there.
President Trump declared on Friday that coronavirus was a public health emergency in the U.S.