Feb. 18 (UPI) — Apple warned on Monday the outbreak of the coronavirus in China is hurting its bottom line.
In a statement to investors, Apple said the COVID-19 outbreak that has stifled China since it began in early December will cause the tech giant to fall short of previous profit forecasts for the current quarter.
The virus has hampered supply and has caused a drop in demand for products in China, Apple said, explaining that is why it won’t achieve the sales expectations for the second quarter of 2020 it forecast late last month.
It said its Jan. 28 quarterly guidance reflected the best information available at the time, calculating the pace of work following the extended Lunar New Year holiday on Feb. 10.
However, COVID-19, which has killed nearly 1,900 people and sickened more than 72,000 in China, has slowed the return to normal working conditions in the country where many of its products, including the iPhone, are made.
In its January guidance, it credited iPhone 11 sales for its strong returns during the first fiscal quarter of 2020, during which it posted $91.8 billion in revenue, an increase of 9 percent compared to the same period last year.
For the second quarter, Apple said the worldwide supply of the iPhone will be “temporarily constrained.”
Its manufacturing partners of the iPhone don’t reside in Hubei province, the epicenter of the outbreak, but they, too, are “ramping up more slowly than we had anticipated.”
“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” it said.
The coronavirus is also affecting demand within the Asian nation where it temporarily closed stores. It said stores that have since reopened are operating under shortened hours and were seeing “very low customer traffic.”
“We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can,” the company said.
It added that outside of China, demand for its products and services has been strong and in line with its previous forecast.
“The situation is evolving, and we will provide more information during our next earnings call in April,” it said. “Apple is fundamentally strong, and this disruption to our business is only temporary.”