“The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic.”
It did include, “Outside of China, customer demand across our product and service categories has been strong to date and in line with our expectations.”Apple provides revenue results for Greater China, which is made up of China, Hong Kong and Taiwan. In fiscal 2019 Greater China accounted for 16.8% of the company’s total revenue. Using some assumptions based on population I estimate that China provided about 16% of Apple’s total revenue.
Assuming that revenue comes in at $60 billion with gross margins able to hit the guidance low-end of 38%, bottom-line EPS should be about $2.57 vs. the Street’s $3.00. This is a major miss to earnings, and the stock could very well fall by 5% or more, especially since there is no good timeline on when life and business in China should be back to normal. However, if the impact from the virus starts to lessen in the next few weeks I expect most investors to look at this as a one-time event.
Footnote: due to a pandemic virus wiping out our slave laborers, we can not guarantee iPhone delivery schedules for Q3.
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