What you need to know
- Microsoft expects to miss its third quarter guidance for its "More Personal Computing" segment.
- The reason for Microsoft's warning is the lingering impact of coronavirus on its supply chain.
- More Personal Computing encompasses Microsoft's Surface and Windows businesses.
Microsoft issued a warning today that it doesn't expect to meet its guidance for Windows OEM and Surface revenues when it reports results for its third fiscal quarter. The cause, Microsoft says, is the effect of coronavirus on the operations of its supply chain, which are returning to normal at a "slower pace than anticipated."
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. 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. All other components of our Q3 guidance remain unchanged.
Yesterday, Microsoft also announced the cancellation of a Hong Kong Ignite event due to coronavirus.
In its second fiscal quarter results, Microsoft projected that its More Personal Computing segment would hit revenues between $10.75 and $11.15 billion. In its statement today, Microsoft said that guidance "included a wider than usual range to reflect uncertainty related to the public health situation in China."
In its Q2 earnings reported last month, Microsoft's More Personal Computer revenues were up two percent to $13.2 billion. Within that, Surface revenue grew six percent to nearly $2 billion.
Microsoft isn't the only major company to experience difficulties due to ongoing coronavirus concerns. In a bid to contain the virus, China shut down factories during the outbreak's peak, though operations are beginning to recover as the virus' spread appears to be on a downward trend in the country. However, coronavirus concerns have grown around the globe as coronavirus' transformation into a pandemic looks likely.
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