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- chocobomog, on 10/11/2007, -9/+42FTA
"Microsoft took a $1.06 billion charge in its fourth quarter due to the hardware defects and extension of the warranty...[the EDD Xbox division] posted an operating loss of $1.2 billion for the fourth quarter... the company said that Xbox and PC game revenue increased 19 percent to $650 million."
So in one quarter, the Xbox lost nearly twice as much money as the entire games division made the entire year? Ouch. Even if they squeak out a profit in 2008, its not going to counter the billions lost by the Xbox division over the last 6 years. That doesn't bode well for a price drop in the near future, Microsoft's game division needs all the money it can get. - piper999, on 10/11/2007, -11/+38Good God. Instead of worrying about all the money I've spent on 360 stuff I feel like maybe I should actually thanking MS for running their gaming outfit like some kind of mega-charity that subsidises everyone who wants to play videogames.
- grumbel, on 10/11/2007, -0/+14Even Microsoft has a limited supply of money and shareholder goodwill. That the XBox1 cost them money was ok, since it established the brand, the XBox360 on the other side better turn out to make them money, since the brand is already established and there really is no good reason to not turn this thing into profit except for mismanagement.
- chocobomog, on 10/11/2007, -2/+12 The entire games division ONLY generated $650 million last year, while that same division also caused 1.2 billion in losses in a single quarter. Even if they are profitable in 2008, their profits will not offset the billions lost. If you were a gambler, then it is exciting to win $200 one day. But if you lost $6,000 prior to winning that $200 then suddenly its doesn't look so good.
How many years do you think the the 360 has left in it? If it only generates $650 million a year (which still does not yield profits), how many years will it take for the profits to offset 6 billion in losses? The 360 will need to be replaced long before that happens, which means billions more in R&D costs. - inactive, on 10/11/2007, -2/+10Has Microsoft ever had a profit from the xbox division yet? I know they didn't at all with the first xbox. But what about the 360?
- inajeep, on 10/11/2007, -1/+9Huh? Gaming is not their core purpose for existing. Who wants to drive them away from the console biz anyway? The more the merrier. You get them trying to drive down prices (eventually), more choice of games. This is where a close competition is good.
- alvinrod, on 10/11/2007, -0/+8I think that the gaming division was profitable in the one quarter that Halo 2 was realeased, but it was only something like $80 million.
Otherwise they've lost something like $4 billion on the whole with the original Xbox. As far as I know they haven't had a profitable quarter yet since releasing the Xbox 360, however they are hoping to be profitable next year. Taking the hit from the warrenty extension now will probably help them to achieve that.
However, on the whole it will probably be several years before they recoup all of the money lost from the original Xbox and everything they've lost on the Xbox 360 up to this point, which is probably something around $7 billion. - Mejogid, on 10/11/2007, -8/+15Since the launch of the original Xbox, they've been sold at a huge loss by Microsoft. MS can afford to spend billions to establish a brand name and prescence in the living room, and with their investment so far I don't see another year of huge losses stopping them.
- grumbel, on 10/11/2007, -0/+7And by 'heart' you mean 'money'...
- jacksons98, on 10/11/2007, -5/+12@Mejogid Investors are already starting to get pissed. Who was it that recently sold millions of shares?? The people who own stock care about one thing and that is how much more did we make over last year. At some point either the Xbox division makes money or it disappears. When that point is nobody knows, but investors don't like losing bilions of dollars. Espescially year after year after year. As the saying goes in business you're either growing or your dying.
- maddendude, on 10/11/2007, -3/+9what are you smoking
- Gryfft, on 10/11/2007, -5/+11Amen. The one part of Microsoft that seems to be genuinely charitable is the Xbox division.
They just want us to have Halo :-) - latova, on 10/11/2007, -1/+7My question is, why don't they just switch to the better hardware instead of still making 360's with the identical flaw, if they're eventually going to need repair anyway thats not profitable.
- toxicityj, on 10/11/2007, -1/+6I doubt that they'd give up on an XBOX 3. Sure losses are insanely high, but we're talking Microsoft here.
- chris9902, on 10/11/2007, -1/+6maybe because it's a story worth putting on the front page. Not another "AMAZING! [pics]" story
- gwolf, on 10/11/2007, -0/+4You should check your sources, Microsoft is worth 4 or 5 times all of Sony.
- sterken, on 10/11/2007, -0/+4It's still cheaper than having to do a recall.
- ExaltedDragon, on 10/11/2007, -11/+14In the latest Issue of Forbes, they published the 2006 Global 500 Index of the largest companies in the world.
Sony is # 69 with $70.9 Billion in revenue
Microsoft is # 139 with $44.3 Billion In revenue
Sony is also protected by the Japanese Keiretsu business ownership structure (think equity sharing to make it simple) so any loss Sony takes is spread like Peanut Butter over bread, while when MS takes a loss, they take it right in the ass like the lone white guy in a prison shower. - replica, on 10/11/2007, -1/+4Sony
Income* 1.04 Bil
Sales Growth* +10.50%
Income Growth* +0.40%
Microsoft
Income* 13.86 Bil
Sales Growth* +11.30%
Income Growth* +65.50%
You Sony fanboys can shutup now. - inactive, on 10/11/2007, -5/+8I care, because even though they can spare the money, they wont be willing to take a loss forever. And with Peter Moore gone I have concerns for its future.
Maybe Moore left because he knew something we dont. The 360 isnt going anywhere, but there is no garentee of a console after it. - Brad324, on 10/11/2007, -2/+5you bought an xbox for peter moore? wtf?
- profingersk8er, on 10/11/2007, -4/+7downloadable for $$$!
- strictnein, on 10/11/2007, -0/+3Man... a lot of Sony fanboys on this thread. Ignore that MS made over $12 billion more than Sony last year and has about $30 billion more in cash. F'en idiots.
- totorototoro, on 10/11/2007, -0/+2Oh really? Did anyone notify the Microsoft Vista division of that "fact"? Because they reported actual profits.
- knetworx, on 10/11/2007, -0/+2If they donated the money to the government, I guarantee the poor would never see a cent of it. I'm sure Camp David would get spruced up a bit though.
- strictnein, on 10/11/2007, -1/+3Please, for the love of the Internet, learn to write in clean, coherent sentences. No one knows what you are saying.
- phrozenone, on 10/11/2007, -0/+2I agree, thats why this past E3 they gave such a strong power point presentation.... go figure
- xzrules, on 10/11/2007, -1/+3i knew that Sony was a bigger corp than Microsoft cause MS is only in softwares with gaming being an exception while SONY makes electronics, music, movies they have a broadcast corp and now they are also manufacturing VAIO laptops
- byronm, on 10/11/2007, -8/+10Oh yeah.. Armchair fortune 500 accounts FTW. Please.. If you can't see the forrest from the trees, keep your trap shut. The console wars are just beginning and Microsoft is in it to win. The reality of the matteris there are 150 million units to sell to the consumer for next gen consoles and Microsoft simply won't walk away from that potential market share. NO way.
The other reality is corporate accounting. Its sort of convenient you get a huge writeoff during your most profitable quarters and its also convenient everyone is unaware of the statement that Microsoft is still on track to profits by 2008. Sure, the losses are unfortunate and not planned for but with a Billion franchise launching this quarter it will be long since forgotten next time we get a financial report. - dunlop, on 10/11/2007, -1/+3screw this I'm selling my 360....not
Microsoft is trying to buy there way into our homes and for me it worked. I love my XBOX, it has the games I want to play and is the media center I need it to be and LIVE is great (Shadowrun FTW). Cling to all the RROD jokes but the fact they gave a 3 year warranty for this is super.
While it comes down to personal choice my Wii is a $350 (I bought it with Zelda) paperweight, there is ***** all to do on the system, I tried to give it some time but the majority of games are brutal ports. I think it is a fine SECOND system, but it really cannot hold a candle to what a 360 or PS3 can do. Obviously nintendo is the best choice if you cannot afford Microsoft or Sony.
Stop worrying about M$ losses, how close Nintendo is to being number 1 or whether the MSG4 will be a Sony exclusive. Research the systems, figure out what you want and can afford and buy the f*cking thing. Stay secure in the knowlege that you bought the best system for YOU and avoid bashing all the other systems on Digg (yes I bashed the Wii...but I bought it so the joke is on me). - shaselai, on 10/11/2007, -0/+2obviously, my point was that it is not "just a billion" to MS either - it has to come off of somewhere-in your case you would get fired and in MS's case most likely layoffs as well. And even a company like MS can't just take Billions and burn it like it's nothing. And a company like MS should know when to quit.
- YouRookies, on 10/11/2007, -4/+6Rushing the release of the 360 backfired on them. This is why a price drop will not be in the near future. It's just too much of a loss. You also have Halo 3 coming out and they know fanboys will pay anything to get a 360.
- burgertime, on 10/11/2007, -2/+4Actually, according to Kotaku, the Nintendo makes a *profit* on their hardware.
http://kotaku.com/gaming/wii/wii-autopsy-discovers-manufacturing-cost-221736.php
I'll take $40 profit any day over $1.6 Billion in losses! - D1lux, on 10/11/2007, -0/+2Manipulating a financial statement is HIGHLY illegal and with the legal scrutiny Microsoft has had to face in the past decade, I doubt they would risk making such a move for a mere console.
- scotz83, on 10/11/2007, -0/+2While it's true Sony has greater revenue, and therefore has farther to fall before hitting zero, don't forget Microsoft's profits last year were around $12.5 Billion while Sony managed just $1.5 Billion. From this view, Microsoft has more cash on hand and can thus withstand a greater financial loss than Sony before falling into the red. Not really Sony's fault - consumer electronics simply cost more to manufacture than software does to write.
Also note Microsoft's market cap is around $298 Billion, while Sony is at $51 Billion, indicating investors as a whole value Microsoft to be worth nearly six times as much as Sony. - spawnfree, on 10/11/2007, -0/+2they really will pull out all the stops to try and dominate the games industry.
Think of the billions they will earn if they do, they may even break even.
just like they almost did with the original xbox. - gwolf, on 10/11/2007, -0/+1Sorry Misread your comment KompressorV12, you are of course correct.
- gwolf, on 10/11/2007, -1/+2You are cherry picking numbers, tell them what Forbes puts their total net worth at.
- gwolf, on 10/11/2007, -0/+1You are mistaken.
- strictnein, on 10/11/2007, -0/+1When did I ever say that all debt was "bad". That's not what I was arguing here.
So, 4 billion in cash with 5 billion in debt is better than ~$30 billion in cash? What a ***** idiot you are. Belittle me? What a joke. Man, what f'en worthless school did you go to? - duccodude, on 10/11/2007, -0/+1That is not stopping the PS3 from parading around yelling "hallelujah, my lord, blu ray!"
- konard, on 10/11/2007, -0/+1Halo? The most overrated game in gaming history wont have On-line? Iam not surprised at all.
- gwolf, on 10/11/2007, -1/+2News for ya, Games are software and MS is a software company, hence reason for existing.
- Microdot, on 10/11/2007, -1/+2the ps3 losses money as it was just introduced. you failed to mention the several hundred million the ps2 STILL brings in topped off with the psp.
how much money is the original xbox still bringing microsoft?
oh.. thats right. it was killed off 2 years ago.
if the 360 doesnt make money for m$ this time around, consider it canned. even the largest companies in the world wont invest billions on a losing venture for 10 years. - OttPrime, on 10/11/2007, -0/+1Consoles loose money for at least the first 18 to 36 months of their existence in the market (Moore's Law is a bitch). Perhaps not billions, but they loose money none the less. Does anyone know the financial report on the MS Games division? That is where the money is made and the investments grow.
- gwolf, on 10/11/2007, -0/+1Not our problem how MS spends it's money, but don't think for a minute you or I know the whole story about their profits.
- lopla, on 10/11/2007, -2/+3Remember "2008 is the year of the PS3".. msft is SCREWED.
- D1lux, on 10/11/2007, -0/+1In reply to your second comment...
You should be the one taking those business courses. A company can operate at a loss with hopes of turning a profit in the future; in fact that is what the Microsoft gaming division is doing. This ties in to the fact that MS does generate billions in revenue, however their gaming division does not. Some companies tend to believe in cutting their losses (again, basic business) so it is a pretty big deal for their gaming division, which is now further away from making a profit. - totorototoro, on 10/11/2007, -1/+2" it that recently sold millions of shares??"
Robbie Bach, of course :p - NeoOfTheSith, on 10/11/2007, -0/+11. Publish Halo DLC
2. ?
3. Profit! -
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