Microsoft Games Division in Red for Q2, Hardware Est. Cut
Posted by XanTium | January 25 18:22 EST
According to Microsoft's fiscal Q2 results, expenses from Xbox 360 marketing, repair and an increased warranty period--not to mention the Zune launch--kept the firm's entertainment division in the red for the quarter.
The Entertainment and Devices Division reported an operating loss of $289 million for the quarter ended December 31, 2006, relatively flat compared to a $286 million loss a year prior.
The division, which houses Xbox, PC and videogames software, the Zune media player, interactive TV products and mobile embedded devices, posted a fiscal first-half loss of $383 million.
Although Microsoft said that the cost to make Xbox 360 hardware lessened, these gains were offset by development and marketing expenses related to Xbox and the Zune's November launch, along with the new Xbox 360 warranty and related hardware repairs.
The company had originally planned to sell 13-15 million Xbox 360s by the end of the fiscal year, but following the earnings release, Microsoft CFO Chris Liddell cut the forecast to 12 million.
Overall, Microsoft reported a 28 percent decline in quarterly net profit as it deferred $1 billion in sales as a result of the Windows Vista delay. The new OS is set to launch January 30. Net profit for Q2 stood at $2.63 billion, while sales were up 6 percent to $12.54 billion.
Full Story: next-gen.biz