Feb 27, 2020 - Technology

Microsoft and other tech firms sound alarm over coronavirus impact

Illustration: Aïda Amer/Axios

More companies are saying publicly that disruptions caused by the coronavirus are hitting their bottom lines. Microsoft warned Wednesday that its personal computing unit, which includes Windows and Surface, will likely miss revenue expectations due to a slower-than-expected return to production after the Lunar New Year.

The big picture: Although Apple was the first big tech company to warn of a financial impact from the outbreak, most industry watchers said they expected the impact to be felt broadly across the industry, which depends heavily on China for manufacturing.

In addition to Microsoft and Apple, chipmaker Nvidia has lowered its revenue expectations by $100 million for the current quarter.

Meanwhile: Global electronics manufacturing association IPC warned this week that the virus could cause suppliers to delay product shipments by roughly five weeks, based on a survey it conducted.

  • The group said that most suppliers are quoting a three-week delay, on average, but the manufacturers expect the real delays will average closer to five weeks.

Our thought bubble: It was always clear that not just Apple, but any company that gets manufacturing done in China, would be affected by the crisis. The question remained whether we'd see just a couple of weeks' impact or a sharper and longer-lasting disruption. We still don't know the answer, but a more serious scenario looks more possible as the virus continues to spread, not just in China but beyond.

Yes, but: A small number of tech companies, those who focus on tech that helps employees work remotely, are seeing an uptick in business. Videoconferencing supplier Zoom, for example, has reportedly added as many users this year as for all of 2019.

Also: IBM is announcing today that its IBM Clinical Development (ICD) system will be available without charge to national health agencies for clinical trials designed to speed development of drugs to combat the virus. The company first offered the software to Chinese health officials last week and will offer it to a broader network of national health agencies.

Go deeper: Coronavirus forces more companies to skip tech conferences

Go deeper

The growing coronavirus recession threat

Illustration: Aïda Amer/Axios

In just a matter of weeks, top economists and investment bank analysts have gone from expecting the coronavirus outbreak to have minimal impact on the U.S. economy to warning that an outright recession may be on the horizon.

What's happening: The spread of confirmed coronavirus cases in Europe, the Middle East and the U.S., and the speed at which they are being discovered has set the table for the outbreak to have a larger and much costlier impact.

Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

Employees produce medical masks at Madaran Medical Manufacturing Company in Robat Karim district of Tehran, Iran. Photo: Fatemeh Bahrami/Anadolu Agency via Getty Images

The COVID-19 outbreak has caused supply chain disruptions for nearly three-quarters of U.S. companies, and many are already pricing in revenue losses this year as a result, according to a special ISM survey.

What's happening: Data show global production out of China fell to an all-time low last month, with freight and shipping slowing dramatically as the virus has shuttered factories and container ports.

Apple is closing non-China stores amid coronavirus spread

Photo: Ding Junhao/VCG via Getty Images

Apple announced it will close all its retail stores worldwide except for greater China until March 27 amid the rapid spread of the novel coronavirus, and will donate $15 million to help mitigate its impact.

Why it matters: Apple's stores are a significant revenue generator for the company, but the flip-side of the company's efforts to make them community gathering spots is that they're now posing a risk as authorities warn against crowd gatherings.