What happened

Stock in barcode scanner and data management company Zebra Technologies (NASDAQ:ZBRA) slumped 13% in March according to data provided by S&P Global Market Intelligence. The fall marks a frustrating period for the company. Just when investors thought Zebra might be over the worst of the fallout of the trade conflict with China -- the company has shifted production away from China in order to mitigate tariff costs -- along comes the novel coronavirus to make matters complicated.

At first, management wasn't too concerned.

"Our current expectation is the coronavirus outbreak could have an impact on sales of between $0 and $50 million," executives said during the first-quarter earnings presentation in February. "This expectation is based solely on facts as we understand them to be today." That wouldn't be a bad result at all, considering revenue in 2019 was $4.49 billion.

A man using a scanner in a warehouse.

Image source: Getty Images.

Since then, the facts have changed, and the COVID-19 outbreak has turned into a global pandemic. In doing so, it's severely impacted manufacturing activity across the globe. That's potentially bad news for Zebra's supply chain, and definitely bad news for its manufacturing and retail customers.

So what

Unfortunately, it's far from clear what the final outcome of the COVID-19 pandemic will be, or the duration of containment measures necessary to curtail its growth. As such, a host of industrial companies have been withdrawing their full-year guidance.

In the case of Zebra, there's a triple-edged level of uncertainty. First, its own supply chain. Second, end demand coming from industrial and retail customers amid the cessation of economic activity. Third, disruptions caused by its own customers shifting manufacturing away from China. All of these add up to create a dynamic situation in which earnings prospects can change at short notice. 

Now what

Just as with the rest of the industrial sector, Zebra investors are going to have to wait and see. It's certainly a company with attractive long-term trends behind it -- manufacturers, logistics companies, and retailers are increasingly generating useful insights from the data gathered by Zebra's scanners and mobile computers -- but the near-term risk is significant.