Microsoft Mauled But Profitable After Xbox Costs
Latest company financials soak up game division losses
The new Halo 3 pack... driving profits?
The thing about having a company the size of Microsoft is that when one of your divisions - in this case 'Entertainment and Devices' - has to spend up to $1.15 billion on repairs, another one makes enough to wipe the loss away.
Despite reports of Microsoft "suffering" or being "hurt" by the announcement that it has earmarked up to $1.15b for Xbox 360 repairs, the bald fact is that the company itself saw profits rise overall. Net profit of $3.04 billion for the fourth quarter were up year-on-year from $2.83 billion - with sales rising 13 percent to $13.4 billion. This rise is mainly due to strong sales of Office.
The other bald fact is that, the Entertaiment and Devices Division (home of Xbox and Zune) is not performing - and has never performed in a financial sense. The repairs bill is damaging - but as no one, including Microsoft, is actually aware about how much it will eventually have to spend in real terms (and that could be less as well as more than the stated figure) - the sum is right now earmarked and not actually spent.
The, departure of erstwhile Xbox evangelist, Peter Moore, to Electronic Arts could be viewed as changing the direction - and stock prices closed higher on the day of the announcement.
So, what do the people who own all the shares (the banks and other financial institutions) think? Bloomberg reports that Pat Becker Jr, "who helps oversee $2.5 billion including Microsoft shares at Becker Capital Management" is not pleased with the reported "$5 billion loss in the past five years amid competition with Nintendo Co. and Sony Corp".
"Given the amount of capital and time they've put in, at some point you evaluate the feasibility of going against Sony and Nintendo. Is that really a place Microsoft should have resources deployed?'' says Becker (Junior).
According to Microsoft, "yes indeedy", with Reuters reporting that, "Microsoft said it still aims for its entertainment and devices division to turn profitable in fiscal 2008, with a boost expected from the September release of Halo 3 the latest installment of one of the best-selling game franchises."
It's going to be an interesting Christmas folks.
Despite reports of Microsoft "suffering" or being "hurt" by the announcement that it has earmarked up to $1.15b for Xbox 360 repairs, the bald fact is that the company itself saw profits rise overall. Net profit of $3.04 billion for the fourth quarter were up year-on-year from $2.83 billion - with sales rising 13 percent to $13.4 billion. This rise is mainly due to strong sales of Office.
The other bald fact is that, the Entertaiment and Devices Division (home of Xbox and Zune) is not performing - and has never performed in a financial sense. The repairs bill is damaging - but as no one, including Microsoft, is actually aware about how much it will eventually have to spend in real terms (and that could be less as well as more than the stated figure) - the sum is right now earmarked and not actually spent.
The, departure of erstwhile Xbox evangelist, Peter Moore, to Electronic Arts could be viewed as changing the direction - and stock prices closed higher on the day of the announcement.
So, what do the people who own all the shares (the banks and other financial institutions) think? Bloomberg reports that Pat Becker Jr, "who helps oversee $2.5 billion including Microsoft shares at Becker Capital Management" is not pleased with the reported "$5 billion loss in the past five years amid competition with Nintendo Co. and Sony Corp".
"Given the amount of capital and time they've put in, at some point you evaluate the feasibility of going against Sony and Nintendo. Is that really a place Microsoft should have resources deployed?'' says Becker (Junior).
According to Microsoft, "yes indeedy", with Reuters reporting that, "Microsoft said it still aims for its entertainment and devices division to turn profitable in fiscal 2008, with a boost expected from the September release of Halo 3 the latest installment of one of the best-selling game franchises."
It's going to be an interesting Christmas folks.
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Microsoft
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Comments
OptimusP 20 Jul 2007 15:23
1/7
Right...so...there's chance that by the end of fiscal 2008, if they don't turn a profit...they'll have to shut down the Xbox-division under shareholder pressure?
Or will MS then take out the "profitable in the third generation"-scheme again?
Or will MS then take out the "profitable in the third generation"-scheme again?
Smelly 20 Jul 2007 19:02
2/7
I reacon msoft has long-term gaming plans. I dont imagine it'll be long before we see windows being compatible with 360 games (for example)
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realvictory 21 Jul 2007 03:11
3/7
No, as long as Microsoft can afford to continue the XBox brand, they will. It's basically a big marketing campaign, but they won't say so because it will lose the XBox integrity.
Still, it's pretty good, and quite clever.
Still, it's pretty good, and quite clever.
DoctorDee 21 Jul 2007 06:53
4/7
It's interesting that Microsoft thinks a platform exclusive like Halo 3 can turn a B$5 loss into a profit, when Take2 couldn't remain profitable when it had the biggest selling game of all time on several platforms. And then the even biggester selling game of all time to follow that up with. And Take2 didn't start off B$5 in the hole.
It WILL be an interesting Christmas.
It WILL be an interesting Christmas.
mrAnthony 21 Jul 2007 12:41
5/7
isnt super mario bros the biggest sellign game of all time?
deleted 21 Jul 2007 18:39
6/7
softy will never cease the xbox regardless of shareholder thoughts, regardless if it doesnt turn a profit, because softys aim is to rule the world, err i mean the living room and what better way to get softy products in there by starting with gaming consoles , mark my words the 720 will be more pc like and have some sort of windows on there ready to take advantage of this(media centre is on the 360!), we can all say that sharholders wont be happy but softy being the kind of business it is and size it is will have massive 20 year plans in place for things like this, my god they will have a plan for the xbox 1080 ready and waiting they wont let anyone take over there living room dream esp sony, or ninty. and sony knows this that is why linux is on ps3 why they are focusing there console with next gen hd veiwing and firmware updates to allow this inter-control between devices and computers they both want a peice and these consoels are just the start its the next gen that will really start to show whos goignt o quit and whos staying, while ninty has its gaming plans and its good, in the end the only person who benifits are the customer you and me will be smiling!
vault 13 23 Jul 2007 06:13
7/7
haritori wrote:
softy will never cease the xbox regardless of shareholder thoughts, regardless if it doesnt turn a profit, because softys aim is to rule the world, err i mean the living room and what better way to get softy products in there by starting with gaming consoles , mark my words the 720 will be more pc like and have some sort of windows on there ready to take advantage of this(media centre is on the 360!), we can all say that sharholders wont be happy but softy being the kind of business it is and size it is will have massive 20 year plans in place for things like this, my god they will have a plan for the xbox 1080 ready and waiting they wont let anyone take over there living room dream esp sony, or ninty. and sony knows this that is why linux is on ps3 why they are focusing there console with next gen hd veiwing and firmware updates to allow this inter-control between devices and computers they both want a peice and these consoels are just the start its the next gen that will really start to show whos goignt o quit and whos staying, while ninty has its gaming plans and its good, in the end the only person who benifits are the customer you and me will be smiling!
i Aggre fuly. THis guys must be analist. He knows his stuf good. good post my ma n.