Apple (AAPL - Free Report) is likely to reopen its retail stores in coronavirus-hit areas outside Greater China as early as April on a staggered basis.
Per a Bloomberg report, which cited an internal memo from Deirdre O’Brien, senior vice president of people and retail, the iPhone-maker expects to reopen some stores in the first half of April.
Moreover, Apple extended remote working facilities and flexible working arrangements to its employees who don’t need to be onsite at least through April 5.
Notably, Apple operates approximately 500 stores worldwide. Of the total, 52 are located in mainland China, Hong Kong and Taiwan, which are currently open. The company closed 458 stores outside Greater China on Mar 13 to slow down the spread of the coronavirus (COVID-19).
Coronavirus Hurts Apple’s Near-Term Prospects
Apple’s shares have been down 15.9% on a year-to-date basis, primarily due to the coronavirus impact. Management in mid-February stated that it might not be able to meet its quarterly revenue expectations issued on Jan 28, 2020 due to iPhone’s supply-chain disruption. Earlier projections for the tech giant’s second-quarter fiscal 2020 revenues were between $63 and $67 billion.
The coronavirus pandemic that originated in China also dented iPhone’s demand. Citing data compiled by the China Academy of Information and Communications Technology, Reuters reported that Apple sold 494,000 iPhones in China during February, reflecting a 61% drop from 1.3 million in the year-ago period.
Moreover, the company has been sluggish enough not to revive its production level to normalcy, which is impacting the global iPhone supply. While factories in China have resumed operations, Apple is facing weakening demand as the countries around the world enforce social distancing.
For instance, Apple suppliers Foxconn and Wistron Corp. suspended production at their Indian plants, which primarily caters to the domestic markets, following nationwide lockdown until April 14. Although India is not a huge market for Apple, the production shutdown is expected to upset its iPhone supply in the near term.
The supply-chain disruption apparently prompted Apple to limit online purchases of iPhones and other devices, last week. However, the company lifted its purchase restrictions early this week. (Read More: Apple Lifts Online iPhone Sales Limit Amid Coronavirus Woes)
Can Non-iPhone Devices Drive Growth?
Apple recently strengthened its non-iPhone portfolio with the announcement of new iPad Pro and new MacBook Air upgrades.
Moreover, the company recently received a waiver from the U.S. Trade Representative (USTR), which excluded its smartwatch from tariffs imposed on exports from China.
Notably, a solid uptake of Apple Watch also helped the company boost its presence in the personal health monitoring space. Moreover, Apple is currently dominating the wearables and hearables markets owing to strong adoption of Watch and AirPods.
Although supply-chain disruption is expected to mar Apple’s prospects in the near term, we believe, non-iPhone portfolio strength and the growing Services business will bode well in the long haul.
Zacks Rank & Stocks to Consider
Apple currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are Microsoft (MSFT - Free Report) , SAP SE (SAP - Free Report) and Garmin (GRMN - Free Report) , all three sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Microsoft, SAP and Garmin is currently pegged at 13%, 9.5% and 7.4% each.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.