This morning, software giant Microsoft reported its earnings declined during the quarter ending September 30. On a year-on-year comparison, quarterly revenue sank 14 percent to $12.92 billion, with profits declining 18 percent to $3.57 billion ($0.40 per share), from $4.37 billion ($0.48 per share). The company blamed the decline on the deferred cost of a program that lets new PC buyers upgrade to Windows 7, which officially launched yesterday.
Of particular interest to gamers is the performance of Microsoft's Entertainment and Devices Division, which makes the Xbox 360 and Zune multimedia handheld, and will have 3D games by year's end. Though Microsoft touted "Windows and Xbox exceed expectations due to strong consumer demand" in the subtitle of its earnings release, the division's earnings were down slightly. Revenues fell from $1.893 billion in July-September 2008 to $1.891 billion during the same three months in 2009.
E&D operating profit, however, nearly doubled, going from $159 million to $312 million during the quarter, which saw the launch of the already multiplatinum 360 shooter Halo 3: ODST. The game was the top US title for September, the same month that also saw the $300 Xbox 360 Elite price drop in full effect. (It began at the end of August.)
[UPDATE] In a conference call with analysts after the report, Microsoft investor relations general manager Bill Koefoed dropped more details on game revenue. For the quarter, overall gaming revenue was up nearly $100 million dollars, with Xbox Live revenues increasing 50 percent.
The executive also revealed that the Xbox 360 now has an industry-best 8.7-title attach rate--that is, an average of 8.7 Xbox 360 games sold for each console sold. More significantly, the 360's installed base is now "almost" 34 million units worldwide, up about 3 million from August. By contrast, Nintendo's Wii had an installed base of nearly 53 million at the end of July, and nearly 24 million PlayStation 3s were sold as of late August.
During Microsoft's prior fiscal year, which ended June 30, the E&D division generated an annual operating profit of $169 million, its second consecutive year in the black. As a platform, the Xbox 360--and before it, the Xbox--had traditionally been money losers for Microsoft since it got into the console business in 2001.
Today, though, Microsoft's overall third quarter profits were bigger than the $0.32 per share predicted by a survey of analysts compiled by the Thomson Reuters news service. As a result, the company stock shot up over $2.40 (9 percent) to over $29 per share in premarket trading.