Microsoft says COVID-19 outbreak will hamper Surface, More Personal Computing unit

The supply chain in China is recovering slower than expected and Microsoft is cutting expectations for its computing unit.

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Microsoft said that its More Personal Computing unit, Surface, and Windows OEM revenue will miss targets, as China's supply chain "is returning to normal operations at a slower pace than anticipated" due to the coronavirus.

The company is joining much of the tech sector in taking down its current quarter guidance due to the coronavirus, which is hampering the supply chain on many fronts. Jabil, a major contract equipment manufacturer, said on Tuesday that its results would fall short of expectations.

Microsoft said it provided a wide revenue range of $10.75 billion and $11.15 billion when it reported its second-quarter earnings due to coronavirus, but revenue for Surface is going to come in lower.

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According to Microsoft:

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.

Fortunately for Microsoft, the company's bottom and top lines are increasingly driven by Office and its commercial cloud revenue, which includes Azure.

The company added that its top priority is the health and safety of its employees. "As the conditions evolve, Microsoft will act to ensure the health and safety of our employees, customers, and partners during this difficult period," the company said.