Microsoft Anticipates Revenue Hit from Coronavirus
Microsoft on Wednesday warned investors that supply chain impacts from the coronavirus health emergency will put a damper on its third-quarter results.
The company had already primed investors for a potential effect from the coronavirus, also known as COVID-19, which arose in Wuhan and has led to mass quarantines and industrial shutdowns in China.
In late January, Microsoft provided what it called a wider-than-usual range of quarterly revenue guidance of $10.75 billion to $11.15 billion for the More Personal Computing segment, which includes Windows and Surface.
"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 said in its 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 did not provide a new range for the current quarter, which runs through the end of March. Revenues for other business units are not expected to be affected.
In the large stock market losses earlier in the week, Microsoft shares declined, but at a slightly lower rate. In extended trading after the announcement, Microsoft shares dropped a further 2%. Also following Microsoft's announcement, chipmaker Intel's shares declined about 1% and PC maker Dell's shares fell by about the same amount.
The warning follows a second quarter when surprisingly strong demand for Windows, partly driven by end-of-support deadlines, helped Microsoft exceed Wall Street expectations.
Posted by Scott Bekker on 02/26/2020 at 9:52 AM