Xbox 360, $350 million in Halo: Reach sales bolster Microsoft bottom line

Sales of console up 38 percent year-over-year, cited as a factor in company's record first fiscal quarter performance; Entertainment and Devices Division sales tally $1.8 billion.

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Microsoft has been banking on the motion-sensing Kinect peripheral to boost sales of the Xbox 360 this holiday season, but it turns out the system has had no trouble selling in advance of the camera system's November 4 launch. The company today announced a record performance for its first fiscal quarter (the three months ended September 30), with Xbox 360 sales up 38 percent year-over-year.

Microsoft's revenues Reach-ed for the stars.
Microsoft's revenues Reach-ed for the stars.

The Entertainment and Devices division, which handles Microsoft's gaming business, as well as projects like the Zune and ill-fated Kin phone, posted nearly $1.8 billion in sales. Microsoft claims that number is up 27 percent year-over-year, but only since it has "recast" previous results "to conform to the way [Microsoft] internally managed and monitored segment performance during the current fiscal year." In last year's first fiscal quarter results, Microsoft reported Entertainment and Devices division revenues of nearly $1.9 billion, essentially flat from the prior year.

The Xbox division's operating profits were also affected by the aforementioned recasting. For the recently concluded quarter, Microsoft posted a divisional operating profit of $382 million, claiming that was up from the previous year's $260 million operating profit. The original number Microsoft reported for its first quarter last year was $312 million.

Companywide, Microsoft touted its all-time best first fiscal quarter performance. Every business unit in the company showed sales growth, and revenues for the three months ended September 30 totaled $16.2 billion, up 25 percent from the prior year. Net income surged even more, jumping 51 percent to $5.41 billion.

Microsoft cited strong consumer demand for the Xbox 360 and its games, as well as Office 2010 and Windows 7, as contributing factors to the growth. While Microsoft didn't break down the numbers, it bears noting that the quarter saw the debut of Halo: Reach, which was credited with bringing in $200 million in sales in its first day on sale. According to the industry-tracking NPD Group, Halo: Reach was also the top game for the month of September, selling 3.3 million units at US retailers.

[UPDATE]: In a post-earnings conference call, Microsoft revealed that Halo: Reach had totaled approximately $350 million in revenues to date and helped drive strong growth in the Xbox Live service.

The company expects to retain its momentum with the help of Kinect. Microsoft is projecting roughly 30 percent year-over-year revenue growth for the current quarter, with a jump of about 20 percent for the full year ending June 30, 2011.

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