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Xbox Turns A Profit

It took 6 years, but they have finally done it.  Microsoft's Xbox division has turned a profit.

Last year Microsoft Entertainment and Devices Division (EDD) President Robbie Bach said that the Xbox business would be profitable in 2008. Well, so far it looks like he's right. Microsoft today posted its second quarter and first-half earnings for the period ending on December 31, and for the first six months of the company's fiscal year the Xbox division has recorded operating income of $524 million compared to a loss of $423 million during the same period one year ago. For Q2 in particular, the Xbox division saw operating income of $357 million.

In terms of revenues, sales grew only three percent in Q2 to $3.06 billion, but for the first half sales climbed 25 percent to $4.989 billion. For the first half of the fiscal year, Microsoft shipped 6.1 million Xbox 360 consoles, up from 5.4 million one year earlier. Growth (and profit) was no doubt driven in large part by the incredible success of Halo 3.

EDD also houses the PC games and Zune businesses, but Microsoft attributed the gains primarily to the Xbox 360. "Xbox platform and PC game revenue increased $1.0 billion or 35% during the six months ended December 31, 2007, as a result of increased Xbox 360 console sales, video game sales led by Halo 3, Xbox Live revenues, and Xbox 360 accessory sales," the company said in its 10-Q filing.

Microsoft said that for the remainder of the 2008 fiscal year it fully expects EDD revenue to continue to increase "due to increased sales of Xbox 360 consoles and related games, accessories, and services."

Overall, Microsoft's second quarter results were hugely positive. The company's revenue, operating income and earnings per share came in at $16.37 billion, $6.48 billion and $0.50 – representing increases of 30 percent, 87 percent and 92 percent, respectively.

 

Source

Published Jan 24 2008, 08:47 PM by jigsawhc
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Comments

 

AJ in HD said:

the market also seems to like this as their stock went up in after hours trading.

January 25, 2008 2:41 AM
 

Soldan said:

Wonder why it took so long to make a profit.  :P

January 25, 2008 4:23 AM
 

Doctor Hoops said:

took so long because they sold the 360 hardware at a loss until recently - think its break even on that now.  Also had a $1 billion write-off to cover all the RROD issues, and until this last fall/winter, there weren't that many gotta-have games to drive sales.  If anything, they hit profitablilty faster than most people thought they would.

January 25, 2008 9:14 AM
 

Sharky said:

I don't buy it. There is no way a division can have a 30% failure rate in its hardware and still turn a profit. I guarantee you they wrote off an assumed cost for this "soft recall" in another division last year, so it is not shown on this quarter/half. They are probably assuming in their figures that there are no more future failures. I always take profit announcements lightly, because they are usually skewed by divisional write-offs and hide administration costs. With a company as large as Microsoft, it is very easy to hide losses in other profiting or administrative divisions. It's a common and easy practice that all businesses do. And is very easy when your division is part of a multi bullion dollar profit company. All they have to do is say the failures are part of a continuing R&D initiative and put the costs there. Im not saying thats what they did, but it is an example of how easy true costs can be hidden.

January 25, 2008 9:56 AM
 

ShapeGSX said:

Sharky, they didn't hide it at all.  They wrote off 1 billion dollars in their Q4/07, which ended in June 07.  Where have you been?

January 25, 2008 3:51 PM
 

Sharky said:

That's what I mean. How can they get away with saying they are profitable when the post billion dollar losses? I guess when you have a reset button every 3 months that is an easy task. And, how can you write off a continuing cost? The Xbox 360's are going to continue to break.

I guess when they say profitable, they mean, for that quarter; not the total sum. Thats a pretty weak way to show success.

January 26, 2008 11:26 AM
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