Microsoft Says Coronavirus Will Impact Revenues

Alonzo Simpson
February 27, 2020

But Microsoft says the supply chain for its Windows business and Surface devices "are more negatively impacted than previously anticipated".

The update comes after Microsoft last quarter had what appears to be the best quarter for its Windows business since Satya Nadella became CEO in 2014 and started refocusing the company on the cloud.

Broad swaths of the Chinese economy have shut down or slowed because of the virus.

Now it seems things have gotten a bit dire with regards to its supply chain and the company is alerting investors that its projection will like slip for the quarter.

Microsoft shares fell 1.75% to $ 167.20 in after-hours operations.

Concerns related to the spread of coronavirus have interrupted global supply chains and weighed on USA stock indices this week, erasing more than 2,000 points from the Dow Jones Industrial Average.

Apple said last week that it will miss quarterly revenue forecasts due to the outbreak, which has infected around 80,000 people and killed more than 2,700.

Spain hotel with hundreds locked down
Spain had so far registered two confirmed cases of coronavirus, both in foreigners. Another visitor said they had not been informed the lockdown would last two weeks.

The guidance reduction follows similar disclosures from device makers Apple and HP Inc.

The company said the remaining elements of its fiscal third-quarter outlook were unchanged.

Microsoft hasn't provided any new guidance for its More Personal Computing segment, which makes sense since the outbreak is ongoing and it's not yet clear how or when it may end.

The More Personal Computing division rose in the holiday quarter to $13.2 billion in revenue, up from just under $13 billion a year ago, reclaiming the title of the company's largest division.

There has been speculation that the impact of COVID-19 on manufacturing pipelines in China and the rest of Asia will have an impact on the planned release for next-generation consoles later this year, including Microsoft's Xbox Series X.

The spread of the virus outside of China also raises the chances of impact of work shutdowns, quarantines, store closures, and conference and meeting cancellations in other countries where technology and other global firms have a significant presence.

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