Apple blamed China's coronavirus for a 'wider-than-usual' $4 billion range in its revenue forecast. But the weird thing is, a $4 billion range is not actually unusual for Apple. (AAPL)

January 28, 2020

Apple blamed China's coronavirus for a 'wider-than-usual' $4 billion range in its revenue forecast. But the weird thing is, a $4 billion range is not actually unusual for Apple. (AAPL)

Apple CEO Tim Cook

Apple offered what it called a "wider-than-usual" revenue forecast for its current quarter, attributing it to the uncertainty over the impact of the deadly coronavirus on the company's business.
But the spread in its range was actually the same as what it offered in three of its previous five quarters.
Apple officials do seem wary of the outbreak, which has been making its way through China, and said they are already seeing some effects from it.
The company and some of its retail partners have closed some stores in China, reduced hours in others, and seen a decline in the number of customers visiting Apple stores, Apple CEO Tim Cook said.
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The coronavirus has Apple executives worried.

So worried, CEO Tim Cook and Chief Financial Officer Luca Maestri said on a conference call on Tuesday, that it has affected Apple's revenue forecast for the coming quarter. Apple predicted that its revenue for its second quarter will range from $63 billion to $67 billion. Maestri called that $4 billion spread between those two numbers "wider-than-usual."

"We attempted to account for this [uncertainty surrounding the outbreak] in our guidance range," Cook said on the call, which followed Apple's fiscal first quarter earnings report.

But the executives were overstating things a bit. Apple has repeatedly given investors a revenue forecast with a $4 billion spread between the bottom and top of the range. In fact, it did so in three of the previous five quarters — including at this exact time last year. And in one of the other quarters, it offered a revenue range that included a $3 billion spread.

To be sure, Apple does seem to still be trying assess just how much it will be affected by the deadly virus outbreak. Thus far, the illness making its way through China has had only a small effect on Apple's business and operations in that country, Cook and Maestri told analysts and investors Tuesday on the conference call.

"The situation is emerging, and we're still gathering lots of data points and monitoring it closely, company CEO Tim Cook said on the call.

It's unclear why Apple would characterize something as unusual that is demonstrably not unusual, at least not in the recent past. Perhaps Apple execs were thinking of a period further back, such as in 2017 or 2018, when the spread in its revenue guidance was often in the $2 billion to $3 billion neighborhood. But it's odd that Apple would leave out that distinction.

Apple executives could not immediately be reached for comment on the matter.

Apple and its retail partners have closed some stores

The iPhone maker and some of its retail partners have closed some of their stores in China and reduced operating hours in others, Cook said on the call. Apple has seen the number of customers visiting its Chinese stores decline in recent days, even outside the Wuhan region, which has been the epicenter of the epidemic. The company has taken extra precautions in its stores, such as doing frequent "deep cleanings" of the facilities and closely monitoring the temperature inside, he said.

While Apple does have some suppliers that are based in Wuhan, the area where the disease is believed to have originated, it has alternatives sources that are outside the region, he said. It's also unclear on when the factories that make those components will reopen after the Chinese New Year celebration, he said.

"The impact is less clear at this time," he said.

Separately, officials at Foxconn, Apple's key manufacturing partner, reportedly said the outbreak won't affect production of the iPhone itself.

The coronavirus has already infected nearly 4,700 people worldwide and led to more than 100 deaths. To try to contain the outbreak, China has put some 16 cities and regions on lockdown.

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