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Apple warns revenue will be lower than expected because of coronavirus impact

Apple warns revenue will be lower than expected because of coronavirus impact

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Worldwide iPhone supply is ‘temporarily constrained’

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Illustration by Alex Castro / The Verge

In a rare investor update on Monday, Apple said the global effects of the coronavirus outbreak are having have a material impact on the company bottom line. The company does not expect to meet its own revenue guidance for the second quarter due to the impact of the virus, and warns that “worldwide iPhone supply will be temporarily constrained.” Store closures and reduced retail traffic in China are also expected to have a significant impact.

All of Apple’s iPhone manufacturing partner sites have been reopened but are “ramping up more slowly than we had anticipated,” which means that fewer iPhones than expected will be manufactured. As a result, “[t]hese iPhone supply shortages will temporarily affect revenues worldwide,” says Apple.

The impact the virus is having on future product development is unclear. Apple is rumored to be launching a low-cost followup to the iPhone SE in March priced at about $400, and new iPad Pros with better cameras in the first half of the year. Bloomberg’s sources report no change in plans but suggest delays or constraints are possible.

Delays or constraints on future product development is possible

Regarding Apple’s retail presence in China, the company said that it is “gradually reopening our retail stores and will continue to do so as steadily and safely as we can.” The company says its corporate offices and contact centers in China are open.

Cook echoed those sentiments in a memo sent to Apple staff, which was obtained by Bloomberg. “I want to thank everyone for their dedication, empathy, understanding, and care,” Cook wrote. “Our paramount concern is with the people who make up Apple’s community of employees, partners, customers, and suppliers in China.”

In its latest earnings call at the end of January, Apple CEO Tim Cook said that Apple already had a “wider-than-usual” revenue range for the second quarter due to uncertainty around coronavirus. Still, it appears that revenue range wasn’t wide enough to account for the growing impact of the public health emergency.

Apple also said it would be doubling a previously announced donation to help with coronavirus relief efforts, though the company hasn’t put a dollar figure to that number.

Update February 17th, 6:17PM ET: Updated with Tim Cook’s memo to staff and a note about future product development.