By Emily Bary
MarketWatch photo illustration/Getty Images, iStockphoto
This article is part of a series tracking the effects of the COVID-19 pandemic on major businesses, and will be updated. It was originally published on April 6.
For Apple Inc., the most valuable U.S. company, COVID-19 creates questions about supply and demand.
On the supply side, some factories in Apple’s /zigman2/quotes/202934861/composite AAPL -0.10% Asian supply chain remained closed beyond the typical Lunar New Year holiday as the coronavirus spread across China. That included factories that assemble iPhones, Apple’s biggest moneymaker, which hurt Apple’s ability to stock up on the devices. China’s lockdowns helped contain the spread of the disease somewhat and many factories in the country resumed production, but a major resurgence of the outbreak could hinder that progress.
One positive sign is that Apple will be launching its lower-priced iPhone SE April 24. The release was reportedly pushed back from March, but it could serve as a test run for the company’s planned unveiling of a 5G iPhone later this year.
Business in the age of COVID-19: Read how other large companies will be affected by the coronavirus
With the disease spreading elsewhere, there are also questions about whether consumers will be willing to pay for Apple’s pricey gadgets amid an economic slowdown. Apple was rolling before the coronavirus outbreak, announcing record revenue in the holiday-shopping quarter and heading toward its first 5G-enabled iPhones, expected to be announced in September. Now, there are questions about consumers will want to spend more than $1,000 on the devices in large numbers even if Apple is able to launch them later this year.
There are similar questions for most of Apple’s other business units — such as iPads, Mac computers and even headphones — but the company’s services division should be fine. With many people staying at home, offerings like the App Store, Apple Music, and new gaming and video services could find more people willing to pay the comparatively lower prices for entertainment to enjoy on their Apple devices.
What the numbers are saying
Revenue: Apple forecast $63 billion to $67 billion in March-quarter revenue when it posted results on Jan. 28, prompting analysts surveyed by FactSet to set their forecasts at $65.1 billion by the end of January. By the end of the first calendar quarter, after Apple rescinded that guidance, analysts expected $57.3 billion.
For the full fiscal year, analysts were projecting $270.45 billion as of the end of the first quarter, down from $273.88 billion at the end of January.
Earnings : Analysts modeled $2.45 in March-quarter earnings per share at the end of the first quarter, down from an estimate of $2.71 at the end of February and $2.99 at the end of January. For the full fiscal year, analysts were projecting $12.83 a share at the end of the first quarter, down from $13.80 at the end of January.
Stock movement: Apple’s stock lost 13.4% in the first quarter of the year, as the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.07% , which counts Apple as a component, lost 23%.
What the company is saying
April 16: Chief Executive Tim Cook said at a virtual meeting for employees that the company is preparing for the day when it can reopen stores and offices and that employees may be subject to temperature checks and social-distancing rules when they return to work, according to a Bloomberg report about the meeting. He also said Apple would continue to invest in development in a “really significant way,” per the report.