Microsoft Forecasts Revenue Hit Due To Coronavirus
Microsoft has joined Apple claiming that revenues are set to tumble because of the Coronavirus, the Company is also warning of short supply of their Surface tablets.
The Office 365 and Xbox maker said that will not achieve their sales predictions for this quarter that it had issued to investors last month as production hits delays.
Sales had previously been anticipated at between US$10.75 billion–$11.15 billion.
Microsoft has not yet provided a revised estimate.
Other tech companies also have highlighted increased uncertainty over their business prospects because of the situation, which has kept some factories in China closed and dented demand.
Graphics chip maker Nvidia this month said it expected a $100 million hit to this quarter’s earnings. Personal computer maker HP. last week said this quarter’s earnings would be affected.
Microsoft said sales of products including the Surface device and Windows have been hit harder than the company expected.
‘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,’ Microsoft wrote in a statement.
‘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.’
Microsoft’s stock fell 1 per cent on the news.
Personal computing — which includes device sales and Windows installations on hardware made by other firms — accounts for around a third of Microsoft’s revenues.
‘When bellwethers like Microsoft come out and talk about the supply chain and how it will negatively impact PC demand, it fans the flames of some of the worries out there for the broader supply chain,’ Wedbush Securities’ Dan Ives told the NYTimes.
The developments underscore the vulnerability of technology supply chains in China, he added.
Apple is heavily reliant on the Chinese market, with the current quarter — containing the busy Chinese New Year shopping period which is seen as being of particular importance to the company.
In contrast to Apple, Microsoft makes relatively few sales within China itself — with the nation’s market accounting for less than 2 per cent of the firm’s overall revenue.