Xbox Division Doubles Profit

[hdinred]

Xbox Division Doubles Profit in Q1

Microsoft is trying its hardest to make sure that the Xbox business stays profitable, and so far so good. Today, although the company as a whole saw revenues and net income decline (14% and 18% respectively) for the first quarter ended September 30, the Entertainment and Devices Division (which houses the Xbox and PC games businesses) experienced a boost in operating income, thanks in part to reduced Xbox production costs.

Net revenues for the quarter were basically flat at $1.89 billion, but operating income jumped 96% from $159 million to $312 million. The non-gaming portion of the division (meaning Zune) dragged business down, Microsoft said. "EDD revenue was flat with growth in Xbox 360 platform and PC game revenue offset by decreased revenue from the non-gaming portion of the business. Xbox 360 platform and PC game revenue increased by $96 million or 8% due mainly to increased revenue from Xbox Live and Xbox 360 video games, offset in part by decreased revenue per console resulting from price reductions during the past 12 months," the company stated in its 10-Q.

Microsoft shipped 2.1 million Xbox 360 consoles during the first quarter of fiscal year 2010, which is slightly down from the 2.2 million Xbox 360s shipped last year at this time. In total, Microsoft has now sold 34 million Xbox 360s around the globe. And the good news is that Microsoft continues to gain production efficiencies in making the Xbox 360. "EDD operating income increased primarily due to decreased operating expenses. Cost of revenue decreased $103 million or 10%, primarily due to decreased Xbox 360 platform costs, offset in part by increased royalties to partners related to increased Xbox Live transactions," the company noted.

The big story for Microsoft overall right now of course is Windows 7. The software giant seems pleased with the early reception for the new operating system. "The worldwide launches of Windows 7, Exchange Server 2010 and Windows Server 2008 R2 are exciting milestones for Microsoft, our partners, and customers," said Kevin Turner, chief operating officer at Microsoft. "We are pleased by the early positive response we are receiving for these products."

[mstrbass2000]

microsoft shareholders happy and share price will continually rise for the rest of the yr,imo

[Sbert]

misleading name of article.

Sad, people that apparently failed basic math and lack basic reasoning and logic skills posting crap like this on their sites.

[hdinred]

Originally Posted by Sbert

misleading name of article.

Sad, people that apparently failed basic math and lack basic reasoning and logic skills posting crap like this on their sites.

What's the problem?

[chaz_uk]

Good stuff for MS.

"Cost of revenue decreased $103 million or 10%, primarily due to decreased Xbox 360 platform costs, offset in part by increased royalties to partners related to increased Xbox Live transactions," the company noted."

Is this saying that that moneyhatting ate into the savings in hardware manufacturing costs?

[mstrbass2000]

look like they saved quite a bit on hardware and increased spending for content on xbox live,which is a good thing for consumers

the company as a whole made another 4.4 billion even in a bad economy and just wait for the next qtr when windows 7 revenues and profits appear

msft is a buy and will go over 35 bucks by yrs end,imo

[Sbert]

Originally Posted by hdinred

What's the problem?

Show me the math doubled profits? I don't see anything in the article numbers wise that supports that. There's a lot of grey area mentioning if operating incoming going up by 96 percent, which I assume is doubling of profit.

...Division (which houses the Xbox and PC games businesses) experienced a boost in operating income, thanks in part to reduced Xbox production costs.

I guess it's a matter of wording really. I think it's a little misleading to call it xbox division vs...Entertainment and Devices Division, which is it. Unless they were able to splice out everything that was Xbox related, take out the PC stuff, take out the zune stuff, and then give us an idea of what the "Xbox devision" did in regards to operating income, I guess that would make sense.

[Indy_aka_Rex]

Originally Posted by mstrbass2000

the company as a whole made another 4.4 billion even in a bad economy and just wait for the next qtr when windows 7 revenues and profits appear

No shit Sherlock, they own more than 80% of the OS market, not to mention they own a high percentage of the smartphone market thanks to WinMo and MSOffice is the most used Office suite software in the world... of course they're gonna be making money in a bad economy - they have virtually no competition.

[Slayer]

Hopefully Sony will post a profit for their games division soon and we can get this industry healthy again. It would be several years before either company shows an overall profit if they were going to do it $300 million a quarter like MS just posted. Then again, at least they are showing steady profit instead of continued losses.

[RedRedSuit]

Sony has posted profits for SCE in a few quarters so far. But now they've changed the way their divisions are set up, so it's going to be harder to tell what's going on on that front.

[murphjp]

Don't forget halo 3:ODST released during this period. And they were only able to keep net revenue flat. In all honesty that isn't good news for MS's game division.

[Sbert]

Originally Posted by RedRedSuit

Sony has posted profits for SCE in a few quarters so far. But now they've changed the way their divisions are set up, so it's going to be harder to tell what's going on on that front.

Well, that's part of the problem. If we could get exact breakdowns that would be great and all I guess, but when you get vague generalizations, then the spin machine can do all kinds of stuff to that information.

Anyways, companies do that on a regular basis (spin that is), so I guess it really doesn't matter. The question is do you fall for it or is the gist of the article good enough to get that information you're looking for.

In this particular article, I was looking for the reason for the profits, and obviously, it's mainly due to Xbox efficiency, software licensing, and some x-box live. Obviously, not so much from hardware sales per se.

[BladeofTheImmortal]

Isn't Sony Entertainment combining their record label plus movie label with the Playstation family(SCEI)?

[miDnIghtEr]

Originally Posted by murphjp

Don't forget halo 3:ODST released during this period. And they were only able to keep net revenue flat. In all honesty that isn't good news for MS's game division.

excellent spin! nice new sig! i see you're completely rattled now.

[Chachi]

Originally Posted by murphjp

Don't forget halo 3:ODST released during this period. And they were only able to keep net revenue flat. In all honesty that isn't good news for MS's game division.

I'm not sure how much a month's worth of sales helps (although this is Halo!), I assume that this title will continue to sell quite well through the holidays though.