Coronavirus forces massive AAPL hit, Microsoft earnings warning
As uncertainty swirls about the coronavirus impact technology industry-wide, industry stalwart Microsoft has issued an earnings warning, and Apple stock price continues to plummet.
Microsoft said that coronavirus impacts are limited to its relatively small hardware division, and to Windows operating system licensing to original equipment manufacturers (OEM).
"Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated at the time of our Q2 earnings call," Microsoft said late on Wednesday. "As a result, for the third quarter of fiscal year 2020, we do not expect to meet our More Personal Computing segment guidance as Windows OEM and Surface are more negatively impacted than previously anticipated."
Microsoft's "More Personal Computing Segment" includes Windows licensing, accessories, Surface hardware, all of Microsoft's gaming initiatives. The company previously expected $10.75 billion to $11.15 billion from the segment in the quarter.
Prior to the announcement, Microsoft stock was worth $170.17 per share. In pre-market trading, it has fallen 3.92 percent to $163.50. It has not issued refreshed guidance, beyond the fact that it would miss its revenue targets from the business segment.
At 9:02 A.M. Eastern time, Apple stock is valued at $283.32. This is a 3.2% drop from the Wednesday's close. The trading day before Apple's statement that it would miss quarterly guidance because of the coronavirus, Apple stock was worth $324.95 at close.
For the most part, analysts believe that the problem is a temporary one, with few industry observers cutting back on long-term Apple stock price prognostications.
Those at greatest risk are children under three and adults over 65. Many of the deaths in the 2019-nCoV outbreak have been those who already had pre-existing conditions that would have made fighting the virus much more difficult, including diabetes, high blood pressure, and heart disease.
Apple's CEO Tim Cook detailed, in response to a query from CNBC, that they were already seeking ways to work around the coronavirus. Alternative sources for parts had already been tapped to fill in where Chinese manufactures would likely fall behind.
Because of demand impacts in China and a slower than expected manufacturing ramp-up, Apple supplied a wide-swinging guidance for the second fiscal quarter earnings. Apple was predicting between $63 billion to $67 billion in the quarter, with the wider than normal range to account uncertainty around the outbreak.
Recently, Apple RAM supplier SK Hynix has told potentially infected workers to stay home. Apple itself issued a virus warning prior to Wednesday's shareholder meeting.
Apple has reopened about half of its retail stores in China for limited hours, but is restricting the number of customers that can enter the store. Apple assembler Foxconn is paying workers extra to return to plants -- and it isn't clear what capacity the factories can deliver at this time.
While infection rates in China appear to be declining, it isn't clear if this is accurate data. Meanwhile, the virus has taken hold in other countries like Italy, South Korea, and more.
Germany isn't able to keep track of all the infection paths anymore, with cases popping up with no clear chain. Additionally, there is now one case of coronavirus in the United States that it isn't clear where the initial infection came from, nor who may be infected as a result of the patient passing through daily life activities, and the U.S. healthcare system.
Microsoft said that coronavirus impacts are limited to its relatively small hardware division, and to Windows operating system licensing to original equipment manufacturers (OEM).
"Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated at the time of our Q2 earnings call," Microsoft said late on Wednesday. "As a result, for the third quarter of fiscal year 2020, we do not expect to meet our More Personal Computing segment guidance as Windows OEM and Surface are more negatively impacted than previously anticipated."
Microsoft's "More Personal Computing Segment" includes Windows licensing, accessories, Surface hardware, all of Microsoft's gaming initiatives. The company previously expected $10.75 billion to $11.15 billion from the segment in the quarter.
Prior to the announcement, Microsoft stock was worth $170.17 per share. In pre-market trading, it has fallen 3.92 percent to $163.50. It has not issued refreshed guidance, beyond the fact that it would miss its revenue targets from the business segment.
Continued AAPL impact from the coronavirus
Apple told investors much earlier that it would be impacted, with a similar message to Microsoft's issued on February 17.At 9:02 A.M. Eastern time, Apple stock is valued at $283.32. This is a 3.2% drop from the Wednesday's close. The trading day before Apple's statement that it would miss quarterly guidance because of the coronavirus, Apple stock was worth $324.95 at close.
For the most part, analysts believe that the problem is a temporary one, with few industry observers cutting back on long-term Apple stock price prognostications.
The coronavirus and the tech industry story so far
The 2019 Novel Coronavirus, officially named "2019-nCoV" is a type of coronavirus responsible for causing respiratory distress in the infected. Symptoms are typically flu-like, with a fever, cough, and shortness of breath. Those infected usually go on to develop pneumonia.Those at greatest risk are children under three and adults over 65. Many of the deaths in the 2019-nCoV outbreak have been those who already had pre-existing conditions that would have made fighting the virus much more difficult, including diabetes, high blood pressure, and heart disease.
Apple's CEO Tim Cook detailed, in response to a query from CNBC, that they were already seeking ways to work around the coronavirus. Alternative sources for parts had already been tapped to fill in where Chinese manufactures would likely fall behind.
Because of demand impacts in China and a slower than expected manufacturing ramp-up, Apple supplied a wide-swinging guidance for the second fiscal quarter earnings. Apple was predicting between $63 billion to $67 billion in the quarter, with the wider than normal range to account uncertainty around the outbreak.
Recently, Apple RAM supplier SK Hynix has told potentially infected workers to stay home. Apple itself issued a virus warning prior to Wednesday's shareholder meeting.
Apple has reopened about half of its retail stores in China for limited hours, but is restricting the number of customers that can enter the store. Apple assembler Foxconn is paying workers extra to return to plants -- and it isn't clear what capacity the factories can deliver at this time.
While infection rates in China appear to be declining, it isn't clear if this is accurate data. Meanwhile, the virus has taken hold in other countries like Italy, South Korea, and more.
Germany isn't able to keep track of all the infection paths anymore, with cases popping up with no clear chain. Additionally, there is now one case of coronavirus in the United States that it isn't clear where the initial infection came from, nor who may be infected as a result of the patient passing through daily life activities, and the U.S. healthcare system.
Comments
Itll probably take the stock a year to recover at this point.
This is just me ranting so don't take it personally. Your post was handy.
flights from known Chinese hotspots.
There are suspicions that this virus may be bi-phasic.
The number one difference between the impact of Spanish Flu and any new viral threat is in our ability to travel huge distances in huge numbers. Mankind has never had the levels of mobility it currently has and that makes it very hard to contain the spread over large distances. Add to that the fact that there are so many of us now and it largely becomes impossible to deal with 100%.
That said, many people who actually have the virus don't go on to develop life threatening conditions so you are right in that there is an element of hysteria in all this.
That from a purely health related stance.
The impact on consumption, economies etc is something else.
Personally, I tend to tread the 'better safe than sorry' path and am in favour of the lock downs and confinements etc, if only not to make the situation even worse.
geez. anything to attract clicks.
A few, such as the influenza viruses, the herpes family of viruses, and HIV have medications that attenuate them, but there are no cures. Some vaccines also serve to attenuate the course of viral infections.
There are some novel therapies that may apply to some of the other viruses, such as a combination of remdesivir and chloroquine that *may* attenuate 2019-nCoV (seems to have activity in vitro, but in vivo results aren’t available).
Give us a break. 5% is not "freefall," nor will it take "a year to recover." And even if it does, who cares. It's doubled in the last year.
Sound crazy somewhere else.
The flu has killed 14,000 people in the US this year, and sickened over 25 million. That's only in the US. Worldwide, the flu has killed nearly 1 million people this year.
In comparison, this has killed 2,462 people on the entire planets, no one in the US. There is no indication that healthy people with a normal immune system are at risk of death.
I think a stock (particularly one as well established as AAPL) falling 12% in less than 5 trading days is fairly described as plummeting.
We've been down this road many times before, and no, the end is not near, the world is not going to end and we are not heading towards a cliff.
Let the weak hands and those who are easily manipulated sell their shares, while others who are smarter are currently out hunting and looking for opportunities to take advantage of the situation.
I'll never forget that HUGE drop that AAPL took some years back. I was guilty of being one of the weak hands back then, but I learned my lesson.Never again.
I am relaxed when it comes to the current situation and it doesn't affect my plans at all. Turn off the fake news, relax and go do something fun, that's my philosophy.
Just one correction... "anti-vaccine" is the opposite of what you mean, I think.
"anti-" means "against".
anti-vaccine means "opposed to or against getting vaccinated". This applies to those people that don't want to get vaccinated.
You probably just mean "vaccines".
Your viewpoint would be very different if your family members caught the virus, or your business was affected, or you were trapped on a cruise ship for two weeks, in a tiny room. Let's try to remember that there are real people affected by this real threat. Perspective is important, but downplaying too much can also be dangerous.
I am talking specifically about the market, not about any personal dealings or experiences that somebody might have had with the virus. My point is that even in the hypothetical situation that somebody I knew caught the virus, am I going to turn around and sell my Apple shares? Nope. That would have zero effect on my strategy.