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Microsoft CEO Satya Nadella told "Axios on HBO" that he is not focused on cutting costs in the face of the coronavirus crisis, but instead aiming to meet "new demand" for Microsoft Teams and other Office applications as more employees work from home.

Why it matters: Tech companies like Microsoft are taking on central new roles in keeping government, business and education up and running as offices shut down to reduce the spread of the coronavirus.

What's happening: Microsoft warned in February that earnings would fall short of expectations due to the virus, but that related to the supply of PCs coming out of China, not the broader impact of the pandemic.

  • Asked if he was contemplating layoffs or slowing in investments in certain areas, Nadella said that's not where he is putting his energy.
  • "So for now, what I'm focused on is ... what I would call new demand," Nadella said. "I don't think, you know, one month ago I would have thought of 'work from home' as a complete new scenario with the type of spikes we have today. Overall activation of Microsoft 365 is increasing significantly." (That's a mix of new paid users and free trials, though.)

While the spike in demand has led to some challenges — Microsoft Teams had an outage in Europe last week — Nadella said that, overall, the shift from company-based servers to the cloud has prepared the economy to handle a large population of employees working from home.

"I think we are so much better equipped today," Nadella said. "But clearly the spikes we are seeing are pretty unprecedented, right? This was not a growth that we had looked at and planned in any spreadsheet or any model we had even a month ago."

Yes, but: It's not like a near shutdown of the economy isn't going to hurt other areas.

  • "When you have large swaths of our consumer economy quarantined, there will be an impact," Nadella said.
  • "We are clearly going to have some demand shock," Nadella said. "But Microsoft is a very diversified business, and that's been one of our strengths through the previous downturns. ... We have a good set of businesses with good business models."

The big picture: With a huge concentration of employees in Washington state — and a presence in China — Microsoft was hit early by the epidemic and acted early, encouraging its employees to work from home and promising to pay hourly workers even if their services were not needed as full-time employees telecommute.

Meanwhile: Nadella said he is still tapping Bill Gates' expertise, even as the Microsoft co-founder announced last week he would step down from the company's board.

  • "Bill has been very engaged in helping us understand even some of the core data and science and also the response side of it," Nadella said, adding, "Bill and his guidance will continue independent of his participation in our board. He will always be our founder, and he'll always be somebody that I'll count on his advice in times like this and beyond."

Go deeper

Biden says he'll make Supreme Court pick by end of February

President Biden speaks on the retirement of Supreme Court Justice Stephen Breyer in the Roosevelt Room of the White House. Photo: Yuri Gripas/Abaca/Bloomberg via Getty Images

President Biden on Thursday said he will announce the nominee for Supreme Court Justice Stephen Breyer's replacement by the end of February.

Driving the news: Biden also affirmed that he will nominate a Black woman to replace Breyer, saying "it's long overdue."

Stephen Breyer formally announces retirement from Supreme Court

Photo: Andrew Harnik/AP

Justice Stephen Breyer on Thursday sent a letter to President Biden formally announcing his retirement from the Supreme Court.

State of play: Breyer said his retirement will take effect when the court "rises for the summer recess (typically late June or early July) assuming that by then my successor has been nominated and confirmed."

COVID created an epic U.S. trade gap

Chart: Axios Visuals. Data: Census Bureau/Bureau of Economic Analysis

The details of the blockbuster fourth quarter GDP report released Thursday morning tell a vivid story of how the underpinnings of the world economy have been reshaped by the pandemic.

One example: In the arithmetic around U.S. economic output, trade acted as a more severe drag last year than it has in a generation.