Since the COVID-19 outbreak triggered by the new coronavirus broke out at the beginning of the year, the global economy has been hit hard, and the U.S. stock market has lost trillions of dollars. Fortunately, as the only remaining trillion-dollar company (down only about 14 per cent so far this year), chief executive Satya Nadella said today that Microsoft has shown strong confidence in emerging from the crisis of the new corona virus outbreak.
Microsoft’s annual share price movement (from: Bing Screenshot)
As a very diversified company, Microsoft has a good balance sheet, says Mr Nadella. Whether or not it counts annuities, the company’s response to the outbreak is far better than the last financial crisis.
With that in mind, the company is confident of emerging from a wide audience. In addition, Microsoft has seen a significant increase in demand for products, particularly the use of Microsoft Teams.
If Microsoft is still using the previous generation of data centers or software architectures, it is clear that it will not be able to respond to this crisis as effectively as it has in the past, Mr Nadella added.
Microsoft subscription services, such as Office 365 and Microsoft 365, are also less affected by the economic cycle and are therefore better prepared than in 2008.
In addition, supply chain conditions have improved as China took the lead in emerging from the outbreak, and Microsoft hardware sales have seen Sugon back on track.
It is not clear whether consumers will be able to purchase a new generation of products at a difficult time to respond to the outbreak. But a large number of companies like Microsoft are clearly not afraid of the risks.
Microsoft is also considering financial support for smaller companies to help them weather the storm. Nadella said:
We think the government is doing the right thing by focusing on the most affected industry workers, as they are more directly responsible for the costs of quarantine and home quarantine.