Why Apple May Skip Issuing Guidance On Q2 Earnings Call — And Not Talk About China Risks

Apple Inc APPL is scheduled to report its second-quarter earnings Thursday after the close.

To Be Thin On Details? If there is no significant improvement in the resumption of production in China before the earnings call, Cupertino may not release third-quarter guidance, Apple analyst Ming-Chi Kuo said in a tweet.

Neither will the company explain how to diversify the risk of concentration of production in China, the TFI Securities analyst said. He is of the view the company cannot adequately explain it, given the limited time on the earnings call.

Apple hasn't been giving a quarterly outlook ever since the iPhone maker withdrew its previously issued guidance for the March quarter of 2020 amid the outbreak of the COVID-19 pandemic.

CFO Luca Maestri, however, is expected to provide directional insights, based on the assumption that the COVID-19 impact does not worsen from what the company was then projecting for the quarter.

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Why It's Important: Apple's production base, especially for introductory creations, are almost entirely found in China, Kuo said last week. When COVID-19 struck in 2020, Apple began evaluating sites elsewhere but this plan did not move beyond a proposal stage, he added.

"However, after the recent lockdowns in China, to diversify supply chain management risks, building NPI sites in non-China is no longer a proposal but an action plan," the analyst said.

Some Apple suppliers which faced disruptions due to a resurgence in infections include Mac assembler Quanta Computer, Pegatron and Compal. 

Hon Hai Precision Industry Co Ltd HNHPF, an iPhone assembler widely known as Foxconn, however, has been relatively immune.

Apple shares closed Friday's session down 2.78% at $161.79, according to  Benzinga Pro data 

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