Jan 29, 2020

China looms large in Apple's earnings report amid coronavirus outbreak

Ina Fried, author of Login

Photo: Nicolas Asfouri/AFP via Getty Images

China figured prominently throughout Apple's earnings report on Tuesday, helping fuel the company's record holiday quarter, but also playing a role in the uncertainty hanging over the current quarter.

Why it matters: Apple is the latest company to flag that China's coronavirus outbreak could harm near-term business.

  • A year after weakness in Greater China prompted a rare earnings warning, Apple returned to growth in the region. The company said it saw double-digit growth in sales of the iPhone and in its services and wearables businesses.

Yes, but: China was also the source of caution throughout Apple's conference call on Tuesday. Specifically, CEO Tim Cook noted that:

  • The company's $63 billion to $67 billion revenue outlook for the current quarter, though better than some analysts had forecast, had a wider range due to uncertainty over the impact of the coronavirus.
  • Apple has closed one of its stores in China, while third-party retailers have closed some distribution points and reduced the operating hours at others. Also, traffic is down at retail stores outside Wuhan.
  • Some suppliers are based around Wuhan, thought to be ground zero for the outbreak, though Apple said it had other sources for all the components it gets there. The impact on suppliers outside of Wuhan is less clear.
  • Factories in China are starting back up later than normal following the Lunar New Year holiday, Cook said, with production due to resume Feb. 10.
  • Apple has limited travel of its employees to China to "business critical" situations. But Apple, of course, has a lot of critical business in China, since nearly all its hardware is manufactured there.

The bottom line: It's too soon to say how great the human impact of the outbreak will be, but it's already a major source of economic risk.

Go deeper: The Fed confronts the coronavirus risk

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Protesters gather at Hennepin County Government Plaza on Thursday in Minneapolis, Minnesota.

Protests in response to the death of George Floyd, a black man who died shortly after a police encounter in Minneapolis, are ongoing as the nation waits to see if the officers involved will be charged with murder.

The state of play: Minnesota's governor on Thursday activated the state's national guard following violent outbreaks throughout the week.

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World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

New Zealand has a single novel coronavirus case after reporting a week of no new infections, the Ministry of Health confirmed on Friday local time.

By the numbers: Nearly 6 million people have tested positive for COVID-19 and over 2.3 million have recovered from the virus. Over 357,000 people have died globally. The U.S. has reported the most cases in the world with over 1.6 million.

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 8:30 p.m. ET: 5,803,416 — Total deaths: 359,791 — Total recoveries — 2,413,576Map.
  2. U.S.: Total confirmed cases as of 8:30 p.m. ET: 1,720,613 — Total deaths: 101,573 — Total recoveries: 399,991 — Total tested: 15,646,041Map.
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  4. Congress: Pelosi slams McConnell on stimulus delay — Sen. Tim Kaine and wife test positive for coronavirus antibodies.
  5. World: Twitter slapped a fact-check label on a pair of months-old tweets from a Chinese government spokesperson that falsely suggested that the coronavirus originated in the U.S.
  6. 2020: The RNC has issued their proposed safety guidelines for its planned convention in Charlotte, North Carolina.
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  8. 🏃‍♀️Sports: Boston Marathon canceled after initial postponement, asks runners to go virtual.
  9. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  10. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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