Microsoft CEO Satya Nadella says hardware supply chain coming back online, but demand is the issue

Key Points
  • Satya Nadella suggested Microsoft is in a better financial position than it was in the previous recession.
  • He joined the company in 1992 and replaced Steve Ballmer as Microsoft's CEO in 2014.
Watch CNBC's full interview with Microsoft CEO Satya Nadella
Watch CNBC's full interview with Microsoft CEO Satya Nadella

Microsoft CEO Satya Nadella said Tuesday that the hardware supply chain is coming back online as the coronavirus outbreak eases up in Asia, but said that the big question would be whether demand holds up in the U.S. and Europe.

"On the supply side we are getting back on rails," Nadella told CNBC's Jon Fortt when asked about whether Microsoft would be able to deliver later this year certain products it had promised before COVID-19 took hold, like new Surface devices and a revamped Xbox gaming console.

Nadella, Microsoft's third CEO, has recast the company more as a cloud services and infrastructure provider, moving away from its historical focus on PC software like Windows and Office, since he took over from Steve Ballmer in 2014. The company has still been financially hit from the disease: It said last month it wouldn't be able to reach its revenue guidance range for the quarter for the division of the business that contains Windows. Several other companies have followed in taking down guidance.

Altogether, though, the company is holding up, Nadella said.

"We have a great balance sheet, we are a very diverse business, we have a mix of annuity, non-annuity, that is also stronger than even the last time we even went into the financial crisis," he said. "I feel confident we'll come out of this, frankly, pretty strong."

He said the company's cloud infrastructure and services have been holding up under increased demand.

"If this was a previous generation of data center architectures or software architectures, I don't think we would have been able to deal with this crisis as effectively as we have been able to," Nadella said.

Bill Gates, Microsoft's original CEO and a co-founder of the company, stepped down from board to focus more on philanthropic activities on March 13. In an email to employees on Saturday Nadella told employees that with the coronavirus impacting Microsoft's home state of Washington and elsewhere, the past few weeks had been overwhelming.

Nadella has been working from home in an office he shares with his daughters, and they've been helping him set up his desk, he said on Tuesday. Previously, he said, "I used to always work from my bed."

Microsoft was earlier than Washington and other states to direct its people to stay home where possible. Nadella said Microsoft would follow public-health guidance in every country where it operates when it comes to bringing employees back to facilities.

He said he support any sort of fiscal stimulus from the U.S. government.

"I think the government is doing the right thing, which is, they're focused on the employees who are most impacted and the industries that are most impacted, and small businesses," Nadella said. "Because those are the parts of the economy that are bearing the burden of this quarantine and staying at home."