UPDATED 21:06 EST / FEBRUARY 02 2020

applestoreclosed POLICY

Apple closes all stores in mainland China on coronavirus concerns

Apple Inc. continues to be hard-hit by the Wuhan coronavirus, closing all of its stores in mainland China on Saturday for at least a week as the virus continues to spread.

The company issued a warning about the virus in an investor call following its first-quarter earnings on Wednesday, giving a wider range than usual on its projected second-quarter earnings on fears about the potential impact of the Wuhan coronavirus on its sales and supply chain.

That projection may not have been wide, or specifically low, enough given that the company has now ceased directly trading in mainland China. As Apple closes its stores, many of its retail partners are also following suit, meaning that at least for the week ahead, if the virus continues to spread, Apple will be selling few to no iPhones in China.

Famed Apple analyst Ming-Chi Kuo estimated in a note to investors that iPhone shipments will drop 10% globally in the quarter to 36-40 million units, adding that shipments were already down 50% to 60% year-over-year in the Chinese market.

Apple will not be alone with a decline in sales in the Middle Kingdom, with all smartphone makers taking a hit. “The smartphone shipments in the Chinese market was 360-380 million units in 2019,” Kou wrote according to Apple Insider. “We expect that shipments will decline by 15% YoY to 310-330 million units in 2020 (vs. 330-350 million units of market consensus) because of lower-than-expected replacement demand from 5G models and negative impacts on consumer confidence from the coronavirus outbreak.”

Even before Apple closed all of its mainland China stores on Saturday, investors saw the storm coming. Apple stock dropping more than 4% in regular trading Friday, to $309.51 per share. It will probably drop further once markets open Monday morning.

Other tech companies with exposure to China, whether it be through manufacturing or retail sales, are also likely to be affected.

There are also coronavirus issues starting to arise outside of mainland China. Uber Technologies Inc. suspended the accounts of 240 users in Mexico exposed to two drivers who had carried a passenger from Los Angeles infected with the virus.

Although there are no confirmed cases of Wuhan coronavirus in Mexico, Uber said it had made the decision to contain its potential spread, according to Bloomberg.

Still, the reaction is arguably over the top. There has been exactly one case outside of China so far where a passenger gave Wuhan coronavirus to a driver — specifically a taxi driver in Bangkok, Thailand. Human-to-human transmission outside of mainland China remains rare.

The one problem, however, in assessing possible cases of Wuhan coronavirus is that the symptoms present as a typical flu. In most countries, those quarantined or suspected of having the virus end up testing negative to Wuhan coronavirus but positive to Influenza A or B.

Photo: Rwendland/Wikimedia Commons

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