From a series of canceled conferences to plummeting share prices, the outbreak of coronavirus (COVID-19) is already taking its toll on the tech industry.
Enterprises are especially concerned about the disruption of the fast-moving infection that originated in China has caused. It has now spread to more than 110 countries and claimed more than 4,600 lives.
In a new filing submitted to the US Securities and Exchange Commission, the lawyers of CRM giant Salesforce shed some light on the circumstances being faced by the software company.
The risk section of the filing notes that Salesforce, like many tech firms, serves its customers using third-party data centers, software, and hardware.
The filing states the ongoing coronavirus epidemic could potentially disrupt the supply chain of hardware needed to maintain these third-party systems or to run our business. It was further added that Salesforce has increased its reliance on these third-party systems and its exposure to damage from service interruptions may increase. The filing further added that interruptions in the services may cause Salesforce to issue credits or pay penalties, cause customers to make warranty or other claims against it, or to terminate their subscriptions and adversely affect its attrition rates and its ability to attract new customers, all of which would reduce its revenue.
The reliance of the tech industry on Asian and, in particular, Chinese component manufacturers means the CRM giant has been badly hit by COVID-19.
Recently, Microsoft and Google have both been forced to take steps for relocating production processes as the virus spreads. The most visible consequence of the coronavirus within the tech sector is the cancelation of hundreds of conferences, including the Salesforce Sydney World Tour 2020. The filing of Salesforce touches upon the issue and states that Salesforce has shifted certain of our customer events to virtual-only experiences in response to the coronavirus epidemic. The filing further states that Salesforce may deem it advisable to similarly alter, postpone or cancel entirely additional customer, employee, or industry events in the future.
It was also added that the geopolitical conditions can affect the rate of IT spending and could adversely affect our customers’ ability or willingness to attend our events or to purchase our enterprise cloud computing services, delay prospective customers’ purchasing decisions, reduce the value or duration of their subscription contracts, or affect attrition rates, all of which could adversely affect our future sales and operating results.