Microsoft suffers losses as Xbox shortages continue

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Microsoft has posted its revenue results for its second quarter ended 31st December, revealing a loss of USD 293 million from the division which manages its next-generation Xbox 360 console. Overall revenue for the quarter was posted at a record USD 11.84 billion, an increase of 9 per cent on the same period a year ago. Profit rose 5 per cent from USD 3.64 billion in 2004 to USD 3.65 billion, although the firm admits that the results have been adversely affected by significant losses in its Home and Entertainment division.

The Home and Entertainment division - which includes the Xbox arm of the business - saw revenues of USD1.56 billion and a substantial loss of USD 293 million, compared to USD 1.37 billion revenues and a USD 55 million profit in the same period in 2004. The continued impact of component shortages for its Xbox 360 console have been cited as the main reason for the loss in profits, though MS officials have stated that the manufacturing troubles are now being resolved.

Microsoft stated that sales of its new console, which have been significantly lower than expected due to widespread supply shortages, had reached 1.5 million during the all-important pre-Christmas period. The figure is broken down in terms of territories as follows: 900,000 in North America, 500,000 in Europe, the Middle East and Africa, and 100,000 in Japan.

The company's previous target of selling 3 million consoles in the first 90 days from launch has now been lowered to 2.5 million as a direct result of the component shortages. Microsoft remains confident that a solution to the supply problem can be found, and still expects to sell 4.5 to 5.5 million by June as manufacturing and retail supply continues around the clock.

News source: gamesindustry.biz

#1 deiong15 on 30 Jan 2006 - 04:45

hmm odd a week ago i read that the xbox though short in supply helped ms stock go up. so they had to make some of that money up.. hate when two different sources say the exact opposite.

#2 Broken Objexxx on 30 Jan 2006 - 05:00

of course the xbox division lost all that money this year, they werent manufacturing a brand new console in high demand that quarter of last year.

i predict that this quarter next year will see even bigger profits than the 55 million in 2004... sheesh, i don't see why people are making a big fuss about this, it's common sense how things are playing out.

(5 replies) #3 Gumboot on 30 Jan 2006 - 05:40

The funny thing is, if the XBox 360 shortages had never happened, Microsoft would have lost even more money!

(They lose money on every console sold)

#3.1 Smigit on 30 Jan 2006 - 06:06

but they would have sold more software and periphals which is where the profit comes from.

#3.2 Mad_Griffith on 30 Jan 2006 - 10:51

peripherals? never seen a MS-branded one.

#3.3 advancedboy on 30 Jan 2006 - 14:15

@1.2: What about the hard drive? If you buy a core, you don't get one. What about the controllers? Surely those are called peripherals...

#3.4 troist on 30 Jan 2006 - 15:59

and the wireless adapters, faceplates and remotes... i can't think of anymore off the top of my head, but there are plenty of peripherals by MS...

#3.5 Narlzac85 on 31 Jan 2006 - 00:04

how many peripherals do you expect to sell very well? Controllers, yes. Harddrives? Some I suppose. Faceplates? Come on, thats such a money making gimmick.

I can list the console peripherals I have ever purchased on my fingers, while I really don't have any idea how many games I have, suppose it somewhere around 70. People must have too much money to know what to do with if they spend $100 on the wireless adapter and $20 on those useless faceplates (they all look worse than the default one). Wired controllers and old fashioned memory cards for the win! (Those were the gold old days...)

#4 kravex on 30 Jan 2006 - 08:51

Not really a suprise, the loss includes all the development costs that was put into the 360 and it's not really been on sale for that long yet.

#5 caveman017 on 08 Feb 2006 - 03:00

All the stores here are still quoting mid march to april before they get any to sell on the floor

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