Blog Post

Earnings: Xbox Division Profit Up 70 Percent; Boosts Microsoft’s Bottomline

Microsoft’s reported a stronger-than-expected fiscal first quarter growth as revenue from its Entertainment and Devices business soared 70 percent on demand for Xbox 360 and Xbox Live. Net income rose 11 percent to $3.48 billion, or 35 cents per share, from $3.14 billion, or 29 cents per share, as revenue rose 11 percent to $10.8 billion. The results beat the average estimate of analysts surveyed by Thomson Financial of 31 cent-profit and sales of $10.75 billion but shares fell in after-hours trading because of lackluster guidance.
Some highlights:
XBox Live passed the 4 million member mark during the quarter; Xbox 360 has sold 6 million units to date.
— MSN posted an operating loss of $190 million because of increased expenses. Revenue fell 3 percent to $580 million. Advertising revenue remained flat as the company switched to its adCenter platform. Revenue will grow by 10 percent in the current fiscal year, CFO Chris Liddell said during the earnings conference call, adding that the company is pleased with the response adCenter has gotten from advertisers.
— Revenue at the Mobile and Embedded Devices business rose 41 percent to $113 million while the operating less narrowed to $2 million.
— Microsoft’s Server and Tools business revenue jumped 15 percent helped by strong demand for programs such as SQL Server 2005
— The first releases of Windows Vista were made available to nearly 5 million customers and the beta 2 version of the 2007 Microsoft Office System was in use by more than 3 million customers.
— Microsoft expects PC demand to remain “healthy but to moderate,” Liddell said.
Earnings release|Conference Call