Microsoft said Wednesday it no longer expects to meet the revenue guidance it issued less than a month ago, due to the coronavirus’s impact on its supply chain.
The tech giant had announced third quarter revenue estimates of $10.75 billion to $11.15 billion on January 29. Those numbers are no longer accurate because Windows and Surface laptops are “more negatively impacted than previously anticipated,” the company said
While Microsoft (MSFT) said it has seen strong Windows demand, its supply chain is recovering more slowly than anticipated. Chinese manufacturers closed factories during the Lunar New Year holiday but the closure was extended by weeks as the coronavirus began to spread through the country. While some factories have reopened, Microsoft (MSFT) said it may take a while to resume normal operations.
“All other components of our Q3 guidance remain unchanged,” the company said. “As the conditions evolve, Microsoft will act to ensure the health and safety of our employees, customers, and partners during this difficult period.”
Microsoft’s announcement comes a week after Apple warned that it no longer expects to meet its previous revenue guidance for the upcoming March quarter, citing “a slower return to normal conditions than we had anticipated.”
“It’s a confession that the coronavirus [is] impacting personal computers,” said Dan Ives, managing director of equity research at Wedbush Securities. “It’s a negative but not a gamechanger for Microsoft. It will have a ripple impact across the supply chain [and] fans the flames on coronavirus worries. Apple and Microsoft have now confirmed the negative impact Wall Street had feared.”
Worries about the coronavirus’s impact on businesses world wide are reverberating across multiple industries. Marriott said Wednesday that it cannot estimate the financial impact from the virus on its business, although it “could be material to first quarter and full year 2020 results,” it said in a release.
Instead, it provided guidance that does not reflect any impact from the outbreak.
Marriott has a big exposure to Asia, and China is its top international market. The company said last year that it was planning to add 300 properties to its Asian portfolio by the end of 2020.