Microsoft warns coronavirus hurting supply chain, will miss revenue target in key segment

Microsoft's supply chains “are more negatively impacted than previously anticipated.”

Microsoft warned Wednesday that it expects to miss revenue guidance for a key segment of its business in the third quarter due to the impact of coronavirus on its supply chain.

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The tech giant said last month that it expected its “More Personal Computing” segment to earn between $10.75 billion and $11.15 billion in third quarter revenue. At the time, Microsoft said it was providing a wider range of guidance than usual due to uncertainty related to coronavirus.

“Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated at the time of our Q2 earnings call,” the company said in a press release. “As a result, for the third quarter of fiscal year 2020, we do not expect to meet our More Personal Computing segment guidance as Windows OEM and Surface are more negatively impacted than previously anticipated.”

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Microsoft said it does not expect supply chain interruptions related to coronavirus to affect other aspects of its third-quarter guidance. The “More Personal Computing” segment includes Microsoft Windows, PC accessories, video games and more.

Concerns related to the spread of coronavirus have interrupted global supply chains and weighed on U.S. stock indices this week, erasing more than 2,000 points from the Dow Jones Industrial Average. More than 80,000 people have been sickened and more than 2,700 people have died from the virus worldwide.

TickerSecurityLastChangeChange %
MSFTMICROSOFT CORP.182.46-0.37-0.20%

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Microsoft is the latest of several companies to detail the potential financial impact of coronavirus. Fellow U.S. tech firm Apple warned earlier this month that it would miss its second-quarter guidance due to supply chain interruptions and weaker consumer demand in China, where authorities have enacted sweeping restrictions to slow the virus’ spread. Mastercard and United also issued financial updates.

TickerSecurityLastChangeChange %
AAPLAPPLE INC.320.99-0.86-0.27%
MAMASTERCARD INCORPORATED304.40+3.00+1.00%
UALUNITED AIRLINES HLDG.29.96+0.51+1.71%

“As the conditions evolve, Microsoft will act to ensure the health and safety of our employees, customers, and partners during this difficult period,” the company added. “We will also continue to partner with local and global health authorities to provide additional assistance. We deeply appreciate the commitment of the people and organizations that have united to address this health emergency; our thoughts are with all those affected across the world.”

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