Microsoft weathers rough economic waters

Xbox 360 maker posts record revenues for the quarter; 2.2 million systems sold helps game biz nearly match Halo 3 quarter's numbers.

The world's economic woes are affecting companies in the game industry differently. Earlier today, Sony cut its profits projections sharply in light of economic conditions, while French publisher Ubisoft touted consecutive quarters of surpassed sales expectations.

After the close of the US market, Microsoft released its own financial recap, emphasizing that the $15.06 billion in sales it brought in for the three months ended September 30 was a new record for the quarter. To complement the company's 9 percent revenue jump, its net profits showed a mild increase to $4.37 billion, up less than 2 percent year-over-year.

Microsoft listed Xbox 360 console sales of 2.2 million (a 20 percent year-over-year spike) as one important factor in its record-breaking revenues. It also said that the Xbox Live service had passed the 14 million member mark during the quarter. Despite those factors, Microsoft's entertainment and devices division actually saw shrinking sales for the three months. The division brought in $1.81 billion for the quarter, compared to the $1.93 billion it tallied during the same period last year.

It's important to note that Microsoft dropped the price of its entire line of Xbox 360 systems during the quarter, and that the prior year's numbers were helped tremendously by the release of Halo 3. Despite the slipping sales, the entertainment and devices division still posted an operating profit of $178 million for the quarter, a bump of nearly 7 percent from the $167 million it managed over the same period the year before.

"In a challenging economic environment, the first-quarter results exhibit the strength and diversity of our business model," Microsoft chief financial officer Chris Liddell said in a statement.

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Discussion

288 comments
Doeshza
Doeshza

You cant say xbox is overrated with all the fanbase. but if sony didnt have such of a rough start with their price structure they could have benefitted even more from xboxs red rings, and not drive the rest of the fanboys over to nintendo to buy the wii or a 360(i got my ps3 after the price dropped and some gift cards lol) i like nintendo but if any system has the capacity to be overrated to me personally it's the wii(until the wii goes hd). great marketing tho by nintendo. it did force microsoft and sony to adapt. when the wii goes hd, thats when ill lose much more sleep at night. lol i really wanna play my wii system but im just too much of an hd wacko on the one tv i play games on.

mazniq
mazniq

Well PS3 now is quite acceptable. Honestly it's better to pay top dollar and get the most of the entertainment. Xbox is good too but it looks kind of overrated.

nintendokid
nintendokid

@darkride66 I'm sorry for calling you a hypocrite because you are anything but that. I withdraw my comment and state anew that you are a fraud. You try to make yourself out as some tri-partisan gentleman. Regardless of whether you have all three systems you are genuinely pro-Sony. And no, I do not think it's wrong to be so. I would no longer have people to debate with if there were no more 360 haters. But you are wrong for not admitting that you blatantly dislike the 360. The fact that you keep buying games and accessories for the Microsoft console does not override the fact that you prefer PS3. Again, there is nothing wrong with that but you fail to acknowledge your allegiance and that is what I have a problem with. I attack you but you keep redirecting my attacks, ending with a "I'm cool with all consoles" note.

intoblivion
intoblivion

Its a great time to buy a Xbox, with a sweet price and sweet games, Gears, Fable and Fallout its pushing the PS3 into the ground.

sgt-hawkins
sgt-hawkins

dark ride you must post more than anyone else in the world, which is ok because atleast you are not a crazy fan boy

darkride66
darkride66

nintendokid said "You complain a lot. You are full of complaints and you do not seem happy with the 360." That's funny. I thought I was discussing issues relevant to the news articles and responding to peoples direct comments to me. Just because they aren't always 100% positive doesn't make them complaints. If you wanted a site where 360 fans got together and patted each other on the backs all day I'm sure you could find one. Sometimes gamers like to discuss gaming issues. "So what if you spent $930 on your 360. That doesn't make you special. Do not pass go. Do not collect $200." Exactly my point. I know I'm not the only one in this boat. "You are full of hypocrisy and complaints." Like I said, this isn't a forum where 360 fans collect to pat each other on that backs. I'm not sure if you're aware of the actually meaning of "hypocrisy" though. Show me where I've ever been a hypocrite. I'm just as vocal when I see people spreading misinformation about other systems as well and just as I'm vocal when I see something I like - for example the 360's new fall update or the storage upgrade offer for people with Arcades or Cores. I think MS did a bang up job on both fronts. But no one notices when I'm positive. The second I'm not 100% pro-Microsoft, people point and scream. At least, every now and then, a legitimate debate about issues will break out. That tends to make it worthwhile.

darkride66
darkride66

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PRforce97
PRforce97

darkride66: "Microsoft should hand out medals to chumps like me. LOL yeah son you got the last 3 words right! You ever heard of a warranty you can get from the retail store when you buy a new console, TV, PC or any high price item. If you would get it you can cover any item for 2 years with the store like Best Buy or Circuit City for a small price. Instead of wasting $900 or $1200 whatever price you said you spent. Just something you should look into.

nintendokid
nintendokid

darkride66: Like I said the other day, if you are happy with your purchase and you truly believe that it is worth the value of the money you have spent, then stop complaining! You complain a lot. Have you read your posts objectively? You are full of complaints and you do not seem happy with the 360. So what if you spent $930 on your 360. That doesn't make you special. Do not pass go. Do not collect $200. FYI, I am on the verge of keeping track of all your posts so you better watch what you say. You are full of hypocrisy and complaints.

darkride66
darkride66

@ Yuck_Too. Ok, responding to a poster regarding a MS topic, in a Microsoft forum isn't quite the same as how you make everything about Sony somehow. I'm still on topic. And you miss my point. I don't care if everyone sucks. That's no excuse. If MS sucks slighly less in terms of service, I know you'd claim that's the best service in the business in your books- and I'd answer back "Yeah, that may be, but it still sucks." If you have two flaming bags of dog crap on your porch, and one is slightly smellier and the flames are a little higher, you wouldn't say "Oh. Great for MS. Their flaming bag of dog crap isn't nearly as big as the one Nintendo left me." No, you'd probably say "What's up with all this crap? This isn't cool." I love how you keep breaking down your MS argument to "But all their friends are doing it." As my Mother taught me when I was 7, that's not an excuse for bad behavior. Lastly, who said anything about repairs? With repairs the total I've spent on my 360 is over $1200, but MS eventually rebated $340 of that back so it wouldn't really be fair to count that now, would it? No, I'm just talking about the unit, extra warranty from MS(which already saved my ass from a disk scratching unit), 2 years of XBL fees (at the monthly rate before someone mentioned to me there was a difference), wi-fi adapter and a couple of charge and play kits. And tax. Man, I didn't even get dinner first, and I'm still buying games for it because, damn, videogames are fun. Like I said. Microsoft owes me some sort of "Thanks for everything, sucker!" award considering I keep giving them money. Anyway, that's a choice I made and I'm living with it.

Yuck_Too
Yuck_Too

--darkride66-- "I really couldn't care less how other support is. I was talking about MS's support and it's not good. Not even close...it still won't change the fact that MS's support is sub par." ~~~~ LOL...I love how you snark at people for staying on topic then rant about anything you like regardless of topic. How can you say you don't care how MS support stacks up to other companies and then call it sub-par...also the fact is while you might think it stinks it is better then the rest which would put it above-average not below it. That's all...oh $900 on 360 repairs?...that's funny...I'd want to see your receipts to prove that claim as well, go figure.

Kratos259
Kratos259

i think darkride may have summed it up better than me. i have an xbox and i enjoy my gaming on it. i wasn't intentionally trying to troll but i see now that was what i did. Rather i was trying point out the hypocrisy of klugenbeel's comment. neither side is perfect but its not exactly fair to start slinging crap like he was, even in a ms post.

darkride66
darkride66

jameston80 said "Darkride66: Is sony paying you for all this? Because i think you should go get a job with sony and stop trolling in Microsoft news." Nuts to you. I've stuck with Microsoft through some pretty horrible support. My 360 has now cost me over $900 for not even three years of play and I'm still buying games on it, because I like to game and that overpriced, malfunctioning white behemoth of a 360 sitting in my entertainment console delivers when it's actually working. Anyone else would have turned their 360 into a projectile after what I've been through and I still like to game on it. If I want to talk Microsoft news in a Microsoft news forum, you're certainly not going to stop me. Microsoft should hand out medals to chumps like me.

TheArcade
TheArcade

Hm that's strange. MS customer support seems fine to me. I had a problem with my 360 and they sent me a new one with 1 month free of XBL gold, it only took a week and a half. This isn't to say they are perfect but they are atleast 2nd to Nintendo's service...which happens to be very good.

jameston80
jameston80

Darkride66: Is sony paying you for all this? Because i think you should go get a job with sony and stop trolling in Microsoft news.

darkride66
darkride66

Yuck_Too said "Sorry MS support is about 10x better then anyone else I had to deal with...at least they actually support their product unlike other manufacturers." I really couldn't care less how other support is. I was talking about MS's support and it's not good. Not even close. Other companies might come over to my house and poke me in the eye when I need customer support and it still won't change the fact that MS's support is sub par. If MS came over and kicked me in the shin you'd probably say "Yeah, everyone does that." That doesn't excuse the fact that it sucks and it's not like this is some sort of huge secret either. The internet is about 50% porn, 10% news/facebook and 40% horror stories of MS's customer support.

Yuck_Too
Yuck_Too

Sorry MS support is about 10x better then anyone else I had to deal with...at least they actually support their product unlike other manufacturers

darkride66
darkride66

Kratos259 said "This is laughable, have you ever actually dealt with Microsoft customer support?" I have to concur with this. It's bad enough I've had to suffer through 3 faulty 360 consoles - but I've lost countless hours on the phone with Microsoft support in the 3 months that I've been without my consoles. The hardest thing for them to grasp was that after having made me pay $170 twice for two of those repairs, when they extended the warranty they owed me that money back. The first check took them almost 6 months to mail out after they announced rebate checks were going out, the second amount I had to fax them my credit card statement before they would even admit that I ever paid that money. What a joke. Be thankful if you've never had to go through this.

greenhillscone
greenhillscone

you nasty nasty people, now look what you've made me do. ive had to report you to gamespot

greenhillscone
greenhillscone

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asimplerapper
asimplerapper

everyone here talks rubbish to me. Just enjoy life and gaming!

dotty1393
dotty1393

no ps3 fanboys. Ps3 fanboys are the worse, they keep talking rubbish saying that the ps3 is far superior and has way better graphics. Well guess what, no one has seen this yet and ps3 fanboys know they havent seen this happen yet, Ps3 fanboys all talk rubbish.

joey0695
joey0695

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Kratos259
Kratos259

Post by klugenbeel. "You know why PS3 is sucking, not enough exclusives, lousy support (Sony has always been known for this), and they don't have the Quanity NOR the Quality of games that the 360 is offering. Deal with it, except it and shut up, because you had your glory with the PS2, but times have changed and Sony dropped the ball, and allowed MS to pick up the ball and take off with it!" This is laughable, have you ever actually dealt with Microsoft customer support? http://www.gameplayer.com.au/gp_documents/080801MICROSOFTpt1.aspx And quality and quantity of games? 90% of games released nowadays are multi platform. Gee you must be playing the same crap we are then. And i suppose games like little big planet, MGS4 and uncharted are just small blips on the radar. How about next time you try to read the article without your own fanboy opinion.

halorulz
halorulz

[This message was deleted at the request of a moderator or administrator]

greenhillscone
greenhillscone

[This message was deleted at the request of the original poster]

TheArcade
TheArcade

@05741699 What the hell are you talking about?

05741699
05741699

iam super human the end.

05741699
05741699

[This message was deleted at the request of a moderator or administrator]

05741699
05741699

where am i getting these powers?. i dont want to be famous or a rockstar of science just the truth :) finished.

05741699
05741699

its one thing to say "i dont care" and another to show you dont care that is why im tired of everyone saying they don't care. honestly people who say they dont care are just hiding what they really feel. iam a scorpio not a pisces how is this possible? finished.

P0T
P0T

Good job MS, I have really enjoyed my 360 and felt I have gotten more then my moneys worth. I have not had any problems with my console and my elite is still running strong a year later. And I use it heavily for gaming and videos and media streaming.

king_bobo
king_bobo

Good for Microsoft. It's a shame that Sony isn't doing so well...

handofthedragon
handofthedragon

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darkride66
darkride66

Makaatsu also said "Your theory that the 360 has lost money or is losing money is your opinion. One that has zero evidence nor in line with what the official FTSE figures show." LOL! Ok, first off, the FTSE is the London stock exchange. They trade stocks, they don't traffic in official financial reports of Microsoft. Since the 360 launched in 2005, there's how it shapes up, and remember, this is just the games and entertainment division. And remember - we're not talking total revenue - that doesn't take into account marketing, how much it cost to make the 360's, distribution, etc. This is net operating profit or loss. You don't have to be a math wiz, or out of grade two necessarily to see MS's games division is in a pretty big hole, one they aren't going to get out of in the next couple of years with profit of only $500 million each fiscal year. 2005: Loss $485 million 2006: Loss $1.284 billion 2007: Loss $1.892 billion 2008: Profit $488 million 2008 http://www.microsoft.com/msft/earnings/FY08/earn_rel_q4_08.mspx 2007 http://www.microsoft.com/msft/earnings/FY07/earn_rel_q4_07.mspx 2006 (2005 is also in here) http://www.microsoft.com/msft/earnings/fy06/earn_rel_q4_06.mspx

ptysau
ptysau

I changed from Wii to Xbox about six weeks ago so I guess I'm part of this trend. It's the games which are coming out now which brought me to the system... and yes the price drop.

darkride66
darkride66

@ Makaatsu. Dude, I even gave you the links to Microsoft's fiscal reports, right from Microsoft's site. It's not my fault if you can't comprehend what you're reading there, and you obviously are having some difficulties. You said "profits in line with what they are now which is $800m PROFIT from the 360 over the past 3 months" but the article clearly states "the entertainment and devices division still posted an operating profit of $178 million for the quarter." $178 million is less than $800 million (where did that even come from?). I suggest you try again.

Krammin
Krammin

So much love for high end corporation profits - Priorities are in a mixed way.

Thorpe89
Thorpe89

Great. Now is a good time to be playing Xbox 360, with all the new titles, sequels and NXE (soon).

tidyspidey
tidyspidey

good news... still though - whilst Sony may have posted profits down, the important thing to remember there is that they are still in profit - not making a loss... I can't see the PS3 dying at all, I can only see it growing and outliving the 360... I too play my 360 most out of the consoles, but I'm under no illusion as to which is the best and most technically capable console. The PS3 eats the 360 - bottom line. As we get further into the PS3's lifespan, you'll see that currently blurred line between them become a definite chasm. And the PS3 is only going to get cheaper too... I don't think it will ever fully catch up the 360 in terms of consoles sold, but I'm sure that it will only be 2-3 years before we see that graphically and technically, the PS3 will leave the 360 far behind.

andrew_ribbons
andrew_ribbons

Nice, glad to know I'll be playing my 360 with the awesome Live community for years to come, no mistake :3

05741699
05741699

[This message was deleted at the request of a moderator or administrator]

AngelsongCA
AngelsongCA

Microsoft is shipping more game consoles, revenues are up, profits are up, XBOX 360 sales are up, the attach rate is up, everything is looking up. It's all good basically.

LindBergh2007
LindBergh2007

I personally believe that the Xbox 360 is the only console that has staying power. It has stronger software support,better quality games and is much cheaper to manufacture for Mircosoft then the original Xbox which used to cost quite alot. Another thing about the 360 is that it's actually starting to do much better overseas then usaul and alot of Japanese developers are supporting it. But there's a crisis going on at the moment. The economy is in reccession. And the U.S. software market is collapsing, software developers are going out of business,3rd party publishers are losing money and thier stock is becoming worthless, game sales are declining leading to fears that a poor holiday retail performance could lead to another crash but the 360 still will survive along with the PS2 because of the cheaper budget and demand and more remaining marked-down software. While the PS3 will continue to drag Sony down to the point of pulling the plug on it and possibly left with still hoping for profit from PS2. Nintendo meanwhile will put all of thier focus on "DS 2". I do know one thing, the worst news there is for PS3( the more the rumors that Sony may pull out of the console market(there IS no PS4 because Sony spent way too much money on R&D for PS3 during a four year period) become more rampant with cries for SEGA to re-enter the hardware market are contested louder then ever to bring out a cheaper more power PS3(latest I checked at system16.com the Lindbergh has more imput now then a year ago with more newer arcade releases in Japan) I'm happy for mircosoft, the 360 really is a good console and those who brought it sohuld hold on to it. If or when the video game market crashes and PS3 and Wii are put out of commission the way things are going the 360 and PS2 should live to see Sega release another console.

ebookerd1
ebookerd1

This is great!! More games to come. I hope they some of this profit back into the hands of the game creators.

Bahaa3000
Bahaa3000

buying me new 360 in 4 weeks , Microsoft add one more console to you're figure :P

codepunk
codepunk

I have all 3 consoles. My 360 is used more than any of them. Just got the PS3 and while cool, the games aren't special. Blu-Ray rocks though! Wii...don't touch it at all. Kids play it now and then but my 9 year old prefers the 360. Glad MS is doing good. More gaming goodness for everyone! Oh, and the free PSN can't touch Live. We'll see how Home does but like all things PS3...we have to wait.