Apple today issued an update on its financial guidance for the March quarter, announcing that the company will not meet its revenue goals due to the impact of the COVID-19 coronavirus epidemic in China.
Our quarterly guidance issued on January 28, 2020 reflected the best information available at the time as well as our best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on February 10. Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.
Apple cites both constrained iPhone supplies worldwide and lower customer demand for Apple products in China as the main impacts on performance for the quarter.
On the iPhone supply side, Apple says all of its manufacturing partner facilities are located outside of the Hubei province epicenter for the epidemic and have reopened, the ramp-up to full production has been slower than expected.
As for customer demand in China, Apple says store closings and limited hours have significantly reduced customer traffic, although corporate offices and contact centers have reopened and online stores have remained open.
Apple says it is continuing to monitor the situation and will provide additional information on its quarterly earnings call in April. Apple also says it is more than doubling its previously announced donation to help in the public health fight against the Wuhan coronavirus.
Apple had predicted in its earnings release at the end of January that it would see revenue of $63–$67 billion for the March quarter, a somewhat wider guidance range than usual as Apple acknowledged the coronavirus situation was leading to some uncertainty, but it appears the impact will be even larger than Apple had accounted for.
Update 5:59 p.m.: Bloomberg has shared Tim Cook's memo to Apple employees addressing the situation:
Team,
The response to COVID-19 has touched the lives of so many in the Apple family, and I want to thank everyone for their dedication, empathy, understanding, and care. Today, we more than doubled our donation to support the historic and global health response.
Our paramount concern is with the people who make up Apple’s community of employees, partners, customers, and suppliers in China. I also want to recognize the many people across our teams who have been working around the clock to manage Apple’s global COVID-19 response with diligence and thoughtfulness.
Corporate offices and contact centers have reopened across China, and our stores are starting to reopen, but we are experiencing a slower return to normal conditions than we had anticipated. This afternoon, I shared this update with our community of shareholders and investors to note that we do not expect to meet the revenue guidance we provided for the March quarter. Outside of China, customer demand across our product and service categories has been strong to date and in line with our expectations. Apple is fundamentally strong, and this disruption to our business is only temporary.
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. Our profound gratitude is with those on the front lines of confronting this public health emergency.
Tim
