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China mobile-phone data suggests a “doomsday” scenario for Apple Inc. in the month of February as the company grappled with the early consequences of lockdowns and store closures related to the novel coronavirus.
That’s according to Wedbush analyst Dan Ives, who cited data from the Chinese Academy of Information and Communications Technology indicating that iPhone shipments in China dropped by more than 50% from a year earlier during February. The figures point to about 500,000 iPhone shipments in the country last month, compared with 1.27 million shipments a year earlier, according to Wedbush’s recent note to clients.
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The Chinese Academy of Information and Communications Technology describes itself as a “scientific research institute directly under the Ministry of Industry and Information Technology (MIIT) of China.”
Apple shares AAPL, -7.90% fell 7.9% in Monday trading, while the Dow Jones Industrial Average DJIA, -7.78% dropped 7.8% and the S&P 500 SPX, -7.59% lost 7.6%.
“[C]alling Chinese iPhone units during this unprecedented coronavirus outbreak is an impossible task with our expectations that units could be down well north of 50% year over year in the March quarter given the massive disruptions from the supply chain and especially demand in the region,” Ives wrote.
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That Apple yanked its March-quarter outlook last month “speaks to the near-term damage done in China over the last six weeks due to the coronavirus and its impact on consumer demand across the board.”
Still, Ives isn’t too panicked about the company’s long-term prospects, writing that the situation in China is a “shock event” rather than an indicator of overall interest in the Apple brand.
“This morning with markets seeing an avalanche of selling pressure triggering circuit breakers, we encourage investors to take a deep breath and focus on the tech winners for the next five to 10 years, including Apple front and center,” Ives wrote. He has an outperform rating and $400 target price on the shares.
UBS analyst Timothy Arcuri wrote that he expects Apple’s China iPhone sales are “tracking close to 2 million below prior-year level” for the March quarter.
“Consensus iPhone estimate of 43 million is only 500,000 below last year, but the data implies close to 2 million impact in China alone,” Arcuri wrote. He trimmed his March-quarter iPhone unit-sales estimates to 40 million from 43 million.
“Supply challenges have given way to broad global demand concerns; if the situation persists deep into the June [quarter], it is possible that Apple would have to delay the 5G iPhone launch this fall, though our base case remains that the launch is on-time and we maintain our C21 estimates unchanged.”
Apple’s stock has lost 17% over the past month, as has the S&P 500. The Dow is off 18%.
