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Microsoft says supply chain slowed by virus outbreak

Associated Press

Redmond, Wash. – Microsoft says its supply chain is being hurt by the virus outbreak in China and the company will return to normal operations at a slower pace than expected.

Microsoft had predicted it would make between $10.75 billion and $11.15 billion in revenue from its personal computing segment in the January-March quarter. But Microsoft says the supply chain for its Windows business and Surface devices “are more negatively impacted than previously anticipated.” Thus, the company says it doesn’t expect to meet that target.

Microsoft’s chief financial officer, Amy Hood, had said on a Jan. 29 earnings call that the company had widened the usual range for its revenue forecast because of the “uncertainty related to the public health situation in China.” The company’s statement Wednesday suggests that the range was not wide enough to reflect the spread of the outbreak and its ongoing effects.

A Microsoft computer at a Microsoft store in suburban Boston.

Microsoft’s personal computing segment includes its Windows operating system, as well sales of its line of Surface laptops and tablets and its Xbox gaming hardware and software. Microsoft didn’t say if its Xbox business has been affected by the supply chain problems.

Last week, Apple warned investors that it won’t meet its second-quarter financial guidance because the viral outbreak in China has cut production of iPhones. The Cupertino, California-based company said all of its iPhone manufacturing facilities in China have reopened, but production is ramping up slowly. The company said demand for iPhones was also down in China because Apple’s retail stores are closed or operating with reduced hours.