The move comes during a week that has seen a market selloff amid fears about the virus. Last week Apple disclosed that it did not expect to reach its own quarterly revenue guidance as a result of impact from COVID-19. Earlier this week HP, one of the biggest sellers of Windows PCs, said that corporate updates to Windows 10 could slip into future quarters.
“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,” Microsoft said in a statement. “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.”
Windows OEM revenue, which derives from selling Windows licenses to device makers, includes licenses for commercial and non-commercial PCs. Revenue from licenses for commercial Windows devices represents 40% of Windows revenue, while revenue from licenses for non-commercial devices makes up about 20% of total Windows revenue.
At $10.75 to $11.15 billion, Microsoft’s guidance for the segment for the quarter was wider than usual specifically because of the public health situation that had been emerging in China. The company did not issue updated guidance. It said the other guidance it had provided for the fiscal third quarter, which ends on March 31, still stands.
The More Personal Computing Segment accounted for about 36% of total revenue and about 30% of operating income in the fiscal second quarter. In addition to Windows and Surface, it includes PC accessories, gaming, search and MSN advertising.
Microsoft stock had declined 4.7% in the past week before the warning, while the Dow Jones Industrial Average has fallen 6.6% in the same period.