Microsoft (NASDAQ:MSFT) is facing a crisis of conscience at the moment. It does not want to completely shut down its services in Russia, other than to sanctioned firms by the embargo. However, MSFT stock could suffer if Microsoft is weak in dealing with Russia.
Reuters recently reported that Microsoft’s President, Brad Smith, wrote to Ukraine’s President, Volodymyr Zelensky, just last month. In the March 14 letter, Smith said that Microsoft plans to continue doing business with non-sanctioned clients, including schools and hospitals. Smith said if his tech firm does not provide these citizens with these services, it could “put at risk the health and safety of innocent civilians, including children and the elderly.”
This, however, may be less sacrificial than other companies that have already suffered from their pullout from Russia.
For example, McDonald’s (NYSE:MCD) has temporarily shut down its 850 stores in Russia and stopped collecting revenue. However, McDonald’s is still paying its employees at those locations. Additionally, the fast-food firm says it’s losing $50 million a month from shutting its doors in Russia. And the company also said it closed 108 locations in Ukraine. In turn, that means McDonald’s is missing 9% of the total revenue that its Russian and Ukrainian locations make up.
Furthermore, Reuters points out that small groups of employees at Microsoft, SAP (NYSE:SAP), and IBM (NYSE:IBM) want management to withdraw fully from Russia. And of course, Microsoft knows how it could cripple Russia’s defense efforts by completely withdrawing from the country.
As a result, MSFT stock could be hurt if investors believe that Microsoft could be seen as balking in willingness to cut ties. Or it could be seen as a problem in Ukraine and by Western governments. This is why Microsoft said it was discussing with the U.S., British, and other European governments whether “to halt any ongoing services and support” in Russia.
So, with all of this in mind, investors may want to watch closely what further moves Microsoft takes in Russia. It is facing a crisis of conscience, as its subsequent moves could set an example for other tech companies. And overall, its pullout could potentially cause a drastic toll on both the Russian government and society at large.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.