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Salesforce’s coronavirus fears revealed in SEC filing

From plummeting share prices to a graveyard of cancelled conferences, the Covid-19 outbreak is already taking its toll on the tech industry.

Firms are especially concerned about the disruption the outbreak could trigger within the complex global supply chain that underpins the sector.

In a new filing submitted to the US Securities and Exchange Commission, Salesforce’s lawyers shed some light on the situation facing the software giant.

The filing’s risk section notes that, like many tech firms, Salesforce serves its customers using third-party data centres, software and hardware.

“The ongoing coronavirus epidemic could potentially disrupt the supply chain of hardware needed to maintain these third-party systems or to run our business,” the filing states. “As we increase our reliance on these third-party systems, our exposure to damage from service interruptions may increase.”

First reported by Business Insider, the filing adds that “interruptions in our services may cause us to issue credits or pay penalties, cause customers to make warranty or other claims against us or to terminate their subscriptions and adversely affect our attrition rates and our ability to attract new customers, all of which would reduce our revenue”.

The tech industry’s reliance on Asian and, in particular, Chinese component manufacturers means it has been hit especially hard by Covid-19. Google and Microsoft have both been forced to take steps to relocate production processes as the virus spreads, Nikkei reports.

But arguably the most visible consequence of the virus within the tech sector so far is the cancellation of hundreds of conferences. Salesforce’s filing touches upon the issue. “In response to the coronavirus epidemic, we have shifted certain of our customer events to virtual-only experiences and we may deem it advisable to similarly alter, postpone or cancel entirely additional customer, employee or industry events in the future,” the filing states.

It adds: “[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.”

Salesforce declined to comment.

The coronavirus has so far killed more than 4,000 people and infected over 116,000.