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Apple says coronavirus will keep it from meeting revenue expectations

The company said its manufacturing sites in China are ramping up more slowly than anticipated and the supply of iPhones is constrained.
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Apple expects to fall short of it previously reported revenue guidance for the March quarter because of problems in production and demand in China due to the coronavirus outbreak.

"Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated," Apple said.

The company said Monday in an investor update that its quarterly guidance issued in late January was based on the best information it had at the time.

It added that the worldwide iPhone supply will be temporarily constrained and that demand for its products in China has been affected, noting that all of its stores in China and many of its partner stores had been closed.

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The stores that are open are open at reduced hours and "with very low customer traffic," Apple said. "We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can," it said.

More than 1,800 deaths have been reported in mainland China and there are more than 70,000 confirmed cases there, according to health authorities. The center of the outbreak is in Hubei province, which is where Wuhan is located.

Apple's iPhone manufacturing sites are outside Hubei province, and although they have reopened, "they are ramping up more slowly than we had anticipated," the company said.

Apple announced Jan. 28 that it expected revenue of $63 billion to $67 billion for its fiscal 2020 second quarter.

The company's statement Monday did not include new expected revenue numbers. It said more information would be released during its next earnings call in April.

"This disruption to our business is only temporary," Apple said. "Our first priority — now and always — is the health and safety of our employees, supply chain partners, customers and the communities in which we operate."

This is the second time in 13 months that Apple has had to cut its guidance because of concerns in China, CNBC reported. In January 2019, Apple was forced to slash revenue guidance for its fiscal first quarter of 2019 because of weak iPhone sales in China, according to CNBC.

Apple CEO Tim Cook said last month that the company would be donating to "groups on the ground helping support all of those affected," and Apple said Monday that the company is more than doubling its previously announced donation to support what it called a historic public health effort.

A spokesperson for Apple did not immediately respond to an emailed request for the exact figure of Apple's new pledged donation.

The Bill & Melinda Gates Foundation has announced that it will commit up to $100 million to improve detection, isolation and treatment efforts.

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Other companies have also announced donations, including Walmart, which has more than 400 stores and 19 distribution centers across 170 cities in China. Walmart partnered with a Shenzhen-based nonprofit organization to donate $143,000 for medical supplies and local relief efforts in Hubei province.

The PepsiCo Foundation donated $725,000 to support front-line responders in Wuhan and provide medical equipment.