Just last week, the global stock market had its worst performance since 2011. Employees of Google and Amazon were diagnosed. With the further expansion of the epidemic around the world, American technology companies ushered in a huge challenge.
Insufficient terminal hardware capacity
In the tech industry, Apple is arguably the first company to feel the impact.
Since Apple’s iPhone production relies heavily on Chinese factories, the outbreak in China has largely affected Apple’s new product suppliers to delay the resumption of work, thus facing production risks. As early as February 17, Apple warned investors that “as an important source of Apple’s revenue, the supply of iPhone will be affected by the epidemic, and Apple’s revenue this quarter will not reach its expected target.” (For details, see Lei Feng.com’s previous report)
A few days ago, Microsoft also sounded the alarm, and its shares fell 7% in recent days. Microsoft said the supply chain in China is “slowly returning to normal operation than expected; Windows OEMs and Surface have been negatively impacted more than previously expected. Microsoft has now canceled a planned March 5 IoT in Action IoT conference held in Melbourne on 20th.
In semiconductors, Nvidia provided a real number, saying it expects revenue to be hit by about $100 million as the outbreak affects consumer spending patterns given quarantines and business closures. However, chip companies such as Intel and AMD have yet to comment on the impact of the outbreak on PC demand or supply chains, even though they only released their last quarterly earnings reports not long ago.
In conclusion, Instinet LLC analyst David Wong believes that the risks to the global semiconductor industry from the outbreak have increased in recent weeks. He added:
We believe that many investors and companies underestimate the risk that current issues could impact demand in the electronics end market in 2020. We should be cautious about the chip industry as a whole.
Some are “happy”, some are sad
In addition to the above-mentioned “substantial” impact, some web-based services have also been hit hard.
As the world’s largest e-commerce platform, many sellers on Amazon have experienced declining inventory and operating difficulties. According to the past rules, if Amzon finds that the product is out of stock or out of stock, it will downgrade the product in the search results, which will affect the normal business order of the mall. It is reported that Amazon has launched a merchant poll on upstream factory delays to “better understand the ability of sellers to current and future product orders.”
Amazon, on the other hand, said late on Sunday that two of its employees in Milan, Italy, had contracted the virus and were being quarantined. It is not known if any U.S. employees have been infected, but Amzon has begun restricting all non-essential U.S. domestic travel/travel for employees until at least the end of April before group or team meetings that require travel.
It is worth mentioning that, also last Sunday, Google parent company Alphabet confirmed to the public that a Zurich Google employee was diagnosed with new coronary pneumonia and the test result was positive. Fearing further outbreaks, Google is further restricting the travel of its employees and banning employees from travel to areas where the virus has spread in China, Iran, and Italy. Starting March 2, Google banned employees from traveling to South Korea and Japan on business.
Cloud service providers have also been affected. Cloud storage and networking software developer Nutaniix said the coronavirus was one of the reasons for lowering its 2020 revenue, with 22% of its total 2019 revenue coming from the Asia-Pacific region. Shares of the company fell 24% in after-hours trading on Wednesday and are down 36% over the past 12 months.
Lei Feng.com has learned that Nutanix will spend another $100 million on software support in 2020 than previously estimated due to revenue cuts. In addition, Workday, an enterprise cloud provider for finance and human resources, canceled its annual inside sales meeting due to concerns about the spread of the novel coronavirus, and will conduct the program online.
Due to the restrictions on people’s travel due to the epidemic, several giants that rely on the sharing economy have also fallen into an embarrassing situation. Shares of Uber and Lyft, for example, tumbled last week. Meanwhile, Airbnb’s plans to go public later this year will be severely affected. Online travel giant Booking Holdings said on Wednesday that the pandemic will dampen travel demand and weigh on its first-quarter sales.
On the whole, most companies have been affected by the epidemic, and the stock market has been falling all the way, but there are exceptions.
On February 3, in U.S. stock trading, the conference video software Zoom Video once rose 14.9%, the largest one-day increase since June. According to market information, Zoom has risen by 107.62% in January this year; it rose by 40% in February.
Video conferencing software company Zoom has attracted more active users this year than it did in all of 2019, analysts at Bernstein Research said in a note to clients on Wednesday. That’s an increase of 2.22 million MAUs to date, compared with an increase of 1.99 million in 2019. Zoom declined to comment for this story.
Officially, the U.S. raised its travel warning level on Saturday and urged U.S. citizens not to travel to Italy’s Veneto and Lombardy regions. The UK government is not recommending blanket restrictions on travel to Asia, but has advised travellers to self-isolate if travelling to areas where the novel coronavirus is widespread, such as mainland China, parts of South Korea and parts of Italy.
All in all, the impact of the epidemic on all walks of life has been reflected in the stock market. In the past week, the US stock market S&P 500 and the Dow Jones Industrial Average fell by 11% and 12% respectively, and the global stock market fell for a week in a row. This is since the global financial crisis. Worst performance ever.
Analysts at Goldman Sachs predict U.S. economic growth will be affected by limited profit growth for S&P 500 companies this year as the pandemic disrupts U.S. companies’ supply chains.