How Bad Could It Get? Companies Gauge the Coronavirus Impact

February 29, 2020
Business

The supply-chain problems have started to affect American homebuilders as well. A senior executive at Toll Brothers said the virus appeared to have delayed the supply of lighting parts.

Answers to your most common questions:

Updated Feb. 26, 2020
- What is a coronavirus?
  It is a novel virus named for the crownlike spikes that protrude from its surface. The coronavirus can infect both animals and people and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
- How worried should I be?
  New outbreaks in Asia, Europe and the Middle East are renewing fears of a global pandemic. The Centers for Disease Control and Prevention warned this week that Americans should brace for the likelihood that the virus will spread to the United States.
- How do I keep myself and others safe?
  Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.
- What if I’m traveling?
  The C.D.C. has warned older and at-risk travelers to avoid Japan, Italy and Iran. The agency also has advised against all nonessential travel to South Korea and China.
- How can I prepare for a possible outbreak?
  Keep a 30-day supply of essential medicines. Get a flu shot. Have essential household items on hand. Have a support system in place for elderly family members.
- Where has the virus spread?
  The virus, which originated in Wuhan, China, has sickened more than 80,000 people in at least 33 countries, including Italy, Iran and South Korea.
- How contagious is the virus?
  According to preliminary research, it seems moderately infectious, similar to SARS, and is probably transmitted through sneezes, coughs and contaminated surfaces. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
- Who is working to contain the virus?
  World Health Organization officials have been working with officials in China, where growth has slowed. But this week, as confirmed cases spiked on two continents, experts warned that the world was not ready for a major outbreak.

At the same time, Chinese consumers are buying less. Apple said the closing of stores in China would depress sales of iPhones and other devices.

Mastercard cut its growth forecast in part because people are taking fewer international trips. Fear of the virus has prompted companies like Amazon and Nestlé to suspend international travel by some employees. That drop in demand, combined with their own concerns about the virus, has prompted United and other airlines in the United States and Europe to cancel flights to cities in China and elsewhere in Asia.

On Friday, United said an investor briefing scheduled next week would be postponed until September. Citing concern over the virus, the airline said it “does not believe it is practical to expect that it can have a productive conversation focused on its long-term strategy.”

Companies may also struggle because investors are becoming more reluctant to lend them money. Appetite for new bonds, especially those issued by less-creditworthy businesses, has fallen off. Banks may also have to tighten lending standards. In a sign that investors believe the coronavirus concerns could hit banks hard, the stocks of the three largest U.S. banks — JPMorgan Chase, Citigroup and Bank of America — are all down by a lot more than the SP 500 so far this year.

Of course, the coronavirus outbreak could end up resembling other brief shocks that have landed only glancing blows on companies and the stock market. These include the fiscal battles of the previous decade that consumed Washington and Wall Street for weeks at a time.

And as recently as Friday, some companies were predicting that their sales would hold up just fine. Volkswagen, the German auto giant, said it expected deliveries this year to be “in line” with 2019. And Apple said conditions were gradually returning to normal in China. “It feels to me that China is getting the coronavirus under control,” Tim Cook, Apple’s chief executive told Fox Business on Thursday. “When you look at the parts that are done in China, we have reopened factories.”

Article source: https://www.nytimes.com/2020/02/28/business/economy/companies-coronavirus-economy.html