The coronavirus (COVID-19) outbreak in China continues to dominate the headlines. The virus is spreading in countries including Iran, South Korea, and Italy, and the number of total deaths has now surpassed 2,200. The Dow Jones Industrial Average (DJINDICES:^DJI) was down 0.68% at 12:40 p.m. EST Friday.
Apple (NASDAQ:AAPL) was one of the Dow's big losers on Friday as investors digested a string of bad news. Meanwhile, shares of Coca-Cola (NYSE:KO) rose after the company reiterated its full-year guidance despite an expected impact from the outbreak.
Bad news piles up for Apple
With the coronavirus outbreak in China ravaging supply chains and knocking down demand, Apple announced earlier this week that it no longer expected to hit its guidance for the fiscal second quarter. That guidance had already baked in some level of uncertainty regarding the outbreak when it was issued on Jan. 28.
The news isn't getting any better for the iPhone giant. On Tuesday, sources for Nikkei Asian Review claimed that Apple is likely behind schedule on production for its expected budget iPhone. Apple's suppliers were supposed to begin assembling the cheaper iPhone this month, according to an earlier report from Bloomberg. That timeline now appears unlikely given the disruption caused by the virus.
On Thursday, Global Times reported that industry analysts were forecasting a 40% to 50% decline in iPhone sales in China in February and March from the prior-year period. All smartphone suppliers are feeling the pinch as consumers pull back on purchases amid the outbreak.
In nonvirus news, Bloomberg recently reported that Apple is considering allowing iPhone users to choose third-party web browser and mail applications as their default options, freeing them from the yoke of Apple's own applications. This potential move comes as Apple faces increasing antitrust scrutiny.
Add it all up, and Apple's second-quarter results are likely to be a mess. Sales in China will likely plummet, and supply disruptions will hit sales in other regions. Apple stock was down 1.5% by early Friday afternoon, and the stock could retreat further from its recent highs if the outbreak isn't brought under control soon.
Coca-Cola reiterates guidance
Beverage giant Coca-Cola expects the coronavirus outbreak to hurt its first-quarter results, but the company still believes it can achieve its full-year guidance. The company reiterated its outlook ahead of the Consumer Analyst Group of New York Conference on Friday. The stock was up 0.6% on a down day for the broader market.
Coca-Cola is now expecting the outbreak to have a 2- to 3-point impact on unit case volume, a 1- to 2-point impact on organic revenue, and a $0.01 to $0.02 impact on earnings per share in the first quarter. These estimates are based on the situation as it stands today, and the company will provide additional information when it reports earnings in April.
Despite the expected hit to its first-quarter results, Coca-Cola is standing by its full-year guidance. Coca-Cola expects to produce 5% growth in organic revenue and 8% growth in currency-adjusted operating income this year. Acquisitions will provide a slight tailwind for total revenue, and the company expects non-GAAP earnings per share of about $2.25.
With Coca-Cola predicting a modest negative impact from the virus, the stock was one of the few Dow components to gain ground on Friday.