Odds are pretty good that Apple (AAPL) and Alibaba (BABA) won't be the last major tech companies to warn that their March-quarter sales will be hurt by the coronavirus outbreak.
Here's a rundown of how tech companies in various fields do and don't have coronavirus exposure -- whether in terms of the outbreak's impact on demand for various goods and services, or in terms of its manufacturing impact.
Chinese Tech Companies
Needless to say, many Chinese tech firms are bound to see a top-line hit as the coronavirus outbreak sparks office, factory and retail store closures, and also motivates many Chinese consumers to go out less.
E-commerce companies such as Alibaba, JD.com (JD) and Pinduoduo (PDD) are among the firms with a high level of exposure, given how the outbreak is impacting both Chinese merchants and logistics/delivery firms. Others include Chinese online travel leader Trip.com (TCOM) (formerly Ctrip) and local services giant Meituan Dianping (MPNGF) .
Chip Companies
Apple's Monday warning -- attributed to both the coronavirus outbreak's impact on Chinese demand and its impact on local manufacturing -- has sparked profit-taking in the shares of iPhone suppliers such as Cirrus Logic (CRUS) , Skyworks Solutions (SWKS) and Qorvo (QRVO) . But it has also sparked profit-taking in many chip names that have little or no smartphone exposure, as markets understandably wager that Chinese consumption and/or production for many other goods will also be meaningfully affected.
Bernstein recently observed that China now accounts for about 35% of global semiconductor sales, and about 30% of semiconductor end-market consumption. Moreover, in addition to smartphones, the Middle Kingdom is a major manufacturing hub for everything from PCs and home electronics to cars and industrial goods. Also, China now handles a large portion of the world's chip packaging and testing work.
IT Hardware Giants
With China accounting for a large chunk of the world's IT hardware manufacturing, firms such as Dell (DELL) , HP Inc. (HPQ) , HP Enterprise (HPE) and Cisco Systems (CSCO) are likely to see meaningful supply chain disruptions if the coronavirus outbreak continues impacting local production. While Cisco issued in-line sales guidance last week, the company did note that the outlook didn't account for any coronavirus-related disruptions.
Lower Chinese hardware demand can also hurt these companies, but some are less exposed than others. Cisco, for example, has noted that it now gets only about 2% of its revenue from China. HPE has higher exposure, thanks to its 49% stake in local IT hardware provider H3C Technologies.
U.S. Software and Internet Companies
This is a group of companies that collectively has limited Chinese exposure -- many U.S. consumer Internet services are blocked in China, and many U.S. software firms get little or no revenue from the country -- and could be seen as safe havens as a result. But some names do have a measure of exposure.
Online travel firms such as Booking.com (BKNG) and Expedia (EXPE) are exposed to the extent that the the coronavirus outbreak impacts global travel spend -- and in Booking's case, the company's partnership with Trip.com also needs to be accounted for. During its Jan. 29 earnings call, Microsoft (MSFT) mentioned that it's providing a wider-than-normal sales guidance range for its More Personal Computing segment, which among other things covers Windows revenue, due to the outbreak.
On the flip side, Zoom Video Communications (ZM) (though having large Chinese R&D operations) might actually be benefiting from the coronavirus outbreak's impact on global travel, as businesses opt to hold video meetings rather than meet in person.
