Microsoft Could See Upside from Xbox Sales-Analyst

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Microsoft Corp. should see its current quarter results lifted by the strong holiday season performance of its Xbox video game console and related game software, an analyst said on Wednesday. Sanford C. Bernstein analyst Charles Di Bona, in a research note, said Microsoft stood to benefit from higher sales of more profitable game software even as discounts cut into its revenues from sales of the money-losing Xbox console itself.

"Preliminary reports from retailers indicate that game software is moving extremely well this holiday season as discount-driven console sales through the fall have boosted the installed base," Di Bona said.

Microsoft recently introduced a bundle that includes two games with the Xbox for the same $199 price that the console had sold for on its own previously, a move characterized by many analysts as an effective price cut.

That bundle, analysts have said, has improved overall hardware sales for Microsoft, though the company actually loses money on each Xbox sold -- up to $150 a unit, by some estimates.

The company said last week it would pour more money into its games business to make it successful rather than cutting its losses and pulling out. The company's home entertainment division, which includes the Xbox, lost $177 million in the last quarter.

News source: Reuters

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