Apple Signals Coronavirus’s Threat to Global Businesses

Countries including Japan and Germany have already been grappling with slowing growth. Japan, which counts on a lucrative flow of Chinese tourists, as well as exports to the country’s enormous market of consumers, may potentially fall into a recession. And there are concerns the coronavirus could crimp Europe’s already weak growth.

As the crisis over the virus has deepened, several large companies have indicated that their production may be hurt and that the damage may spill over into their financial results. China’s giant network of factories, which accounts for a quarter of the world’s manufacturing output, was sluggish in ramping up after the extended Lunar New Year holiday that the authorities imposed because of the outbreak.

Fiat Chrysler Automobiles recently temporarily shut a factory in Serbia because of shortages of Chinese parts. The European aerospace giant Airbus has indicated it is only slowly restarting its assembly line, and automakers like General Motors and Toyota have begun only limited production in recent days.

Starbucks and Ikea have also closed their stores in China and many shopping malls in the country have been deserted, threatening to squeeze sales for retailers like Nike and others. International airlines, including American, Delta, United, Lufthansa and British Airways, have canceled flights to China, and hotel chains around the world may feel the loss of Chinese travelers.

An economic slowdown for China this year could clip global economic growth by 0.2 percent to an annual rate of 2.3 percent, according to one forecast from Oxford Economics. That would be the slowest pace since the global financial crisis late last decade.

The next signal of the virus’ impact is expected to come on Tuesday, when Walmart is scheduled to report quarterly results.

Apple declined to comment beyond its statement.

For Apple to warn that it will miss sales expectations is highly unusual. The Silicon Valley company has been one of the world’s most profitable firms and it has a cash pile of more than $200 billion. The last time it cut its sales forecast was in January 2019 — the first time in 16 years it reduced its revenue guidance — because of poor iPhone sales in China.

Article source: https://www.nytimes.com/2020/02/17/technology/apple-coronavirus-economy.html?emc=rss&partner=rss