Xbox division limps to 2nd straight profitable year

Microsoft's gaming business loses $130 million in fourth quarter on decreased system sales, but ends $169 million in the black for the 12-month stretch; 11.2 million 360s shipped for the fiscal year.

Last year, Microsoft's entertainment and devices division--the business segment containing the company's Xbox 360 and Zune product lines--posted its first-ever operating profit for a full fiscal year. The division made it two in a row today, but only after a lackluster performance for the fourth quarter, as detailed in Microsoft fiscal year-end earnings report.

Microsoft shipped these out at a rate approaching 1 million per month.

In the fourth quarter (the three months ended June 30), Microsoft's entertainment and devices division saw revenues of $1.19 billion, down 25 percent year-over-year from $1.59 billion. If there's any consolation there, it's that the segment's losses shrank at the same pace. The gaming business posted operating losses of $130 million for Microsoft's fourth quarter, down from $171 million over the same stretch last year.

For the 12 months ended June 30, entertainment and devices pulled in sales of $7.75 billion, down 6 percent from the prior year's take. While the overall revenue was down marginally, the segment's operating profits took a more significant hit, down 66 percent to $169 million from the previous year's $497 million.

Microsoft blamed both the quarterly and full-year slides on "decreased revenue per Xbox 360 console due to price reductions during the past 12 months, partially offset by increased Xbox 360 console sales and increased Xbox Live revenue." While the company made less per system, it actually shipped out considerably more than in the previous year. Microsoft's fiscal 2008 saw the company move 8.7 million Xbox 360s to stores, while fiscal 2009's total jumped to 11.2 million.

The rest of the company fared similarly, as Microsoft's companywide sales and operating income also shrank. For the fourth quarter, Microsoft posted revenues of $13.01 billion (down 17 percent year-over-year) and operating income of $3.99 billion (down 30 percent). Over the course of the company's entire fiscal year, revenues were down 3 percent to $58.44 billion, while operating profits slipped 9 percent to $20.36 billion.

Microsoft's entertainment and devices division includes the Xbox 360, Zune, and Windows-based PC gaming, as well as other products, such as the Surface touch-screen table and Mediaroom Internet TV service.

432 Comments

  • Agelu

    Posted Nov 7, 2009 1:22 pm PT

    Hard persistance finally paid off.

  • kamizuka

    Posted Aug 19, 2009 10:01 am PT

    @D3A7HJ0K3R was kindda right Xbox 360 only have Halo 3 and Gears of war, those are the cool games any way, but in the other hand the Ps3 has SOME blue-ray games and ofc they should make more like you know (MGS4, infamous, GOW3) these are the ones i liked and KZ2 really sucked i played the game ones then got bored
    they sold more of the 360 because of the RRod i know a person that bough 3 of them, yeah he is a rich brat, but i am totally not stupid enough to buy an other one

  • andrew_ribbons

    Posted Aug 4, 2009 6:55 am PT

    Like others here, i am highly amused by the fact that so many alleged Sony fans have simply forgotten that little debacle with the Disk Read Errors. I certainly know that even the newest PS2 Slims sold today, over 10 years after the console was first released, the problem still rears it's head. Sony were indeed caught up in a lawsuit for reasons of not supporting their customer base adequately, expecting fees for repairs on consoles with major material defects.

    Microsoft have put a lot of effort into fixing these hardware faults, such as redesigning the motherboard, increasing the heatsink cooling inside, and reducing the heat output of the CPU and GPU chips, the big power users. These efforts have ammounted to a drastic improvement in reliability in new 360s sold after 2007.

    Microsoft have supported their community with a 3 year RRoD warrenty, they've also refunded anyone who ever paid for a RRoD fix. This, in my eyes, is fair treatment of their customer base. They've never had a lawsuit where their customers were so unanimously in agreement against them, as Sony did those years ago. In regards to this article, i think MS have done very well to post an operating profit this year. It's been a tough year for everyone, everywhere in the world. The fact they still came out with any kind of profit, is very admirable management. Sure it wasn't the epic figure of last year, but then just look at Ninty as they've had the same exact kind of fall respectively.

  • melty3219

    Posted Jul 28, 2009 4:14 pm PT

    @D3A7HJ0K3R The PS3 has RROD huh? wow and i thought it was a 360 problem, now for the games.

    KZ2 - Biggest flop in gaming history barely sold and overhyped peice of crap

    Resistence - tried to copy the gears story but failed hard and gears 2 has outsold it when they had almost the same release date.

    Ninja gaiden - allready played it and dont plan to rebuy it with just a few wepons and extras more or less the same game

    Warhawk - Battlefield copy and now Battlefield 1943 has made it useless

    FF 14 - yes because 11 was great *rolls eyes*

    FF 13 VS - i dont know much about this 1 nor do i care FF13 will be on xbox too.

    i can also name games to but it seems like somes already dont that - http://en.wikipedia.org/wiki/Xbox_360_exclusives

    also before calling other DUMB learn to spell it first.

  • D3A7HJ0K3R

    Posted Jul 28, 2009 11:35 am PT

    @melty3219, and the ps3 has RROD and doesn't have KZ2, LBP,Uncharted 1-2, Resistance 1-2, Ninja Gaiden Sigma 1-2, Warhawk, Final Fantasy 14 and final fantasy 13 Versus, and a hella lot others. And the only fun exclusives you have are Gears of War 1-2 and.. and.. That's it. Dumass Fanboy.

  • melty3219

    Posted Jul 28, 2009 9:56 am PT

    haha 360 Beats PS3 on everything, also the 360 owners can actually afford to buy some games becuase they never blew off $600 on a crapstaion 3 also the 360 HAS GAMES TO BUY

  • Wings_008

    Posted Jul 28, 2009 8:14 am PT

    11.2 million doesnt sound bad at all

  • kakashi6666

    Posted Jul 28, 2009 4:09 am PT

    i bet they only lasted so long coz peopl never playd them as much as they do the 360 we arent ment to play the 360 for 5 or 6 hours a time thats y the over heat and u get the rrod

  • king_chapeton15

    Posted Jul 27, 2009 3:36 pm PT

    people get ridiculously thumbed down when they express how the past consoles such as atarti and sega last much longer than xbox 360

    its opinions people calm down

  • thenephariouson

    Posted Jul 27, 2009 11:44 am PT

    Yuck_Too

    I think its more a case of 'ignorance is bliss'.

  • Yuck_Too

    Posted Jul 27, 2009 7:26 am PT

    It truly makes me wonder and laugh at how old some of the people here are.

    Sony's PS2 had an estimated 30-million failed units shipped worldwide due to the DRE which they lost a nationwide class action lawsuit filed against them for failing to support.

    So sitting here saying Sony would never have had the problems the 360 had just proves either you were too young to remember...or forgave and forgot and moved on.

  • Mirk108

    Posted Jul 26, 2009 4:59 pm PT

    I've never experienced problems with my xbox 360, the only downside about it is the noise when im playing games. Though when your playing you dont even really notice it. The only reason i sent my xbox back to ms for fixing lol is because it was struck by lightning. Seriously!

  • thenephariouson

    Posted Jul 26, 2009 1:29 pm PT

    Ok i'll throw my two peneths worth in, Im on my 3rd 360 (due to RROD), i purchased my first on 'day 1', and although ive suffered the same fate as alot of other 360 gamers, my patience has certainly been tested to the point of being 'almost' tempted to give up and purchase an alternative console (mentioning no names). The reason i have'nt is simply due to the fact that, for me, there is simply no other console available that provides the same catalogue of quality games, combined with an unparralelled Online service.

    I know im not alone in my opinion, but with all the problems the 360 has experienced (predominently RROD), the fact that people like me consistently stick with the 360 is simply testiment to the great gaming experience it provides.

  • kakashi6666

    Posted Jul 26, 2009 11:41 am PT

    i went thru 4 ps2s and i dont think ms knew about the rrod problem before they released the 360

  • TongLong

    Posted Jul 26, 2009 9:50 am PT

    @MagicOneUp

    No one's moaning and crying, my 360 is my main console, and friends of mine who have had the RRoD issue (four off the top of my head) have had great experiences with M$ getting their consoles fixed or replaced outright.

    My issue is that the problem is occurring AT ALL, let alone with such frequency! Sure, M$ spent one billion dollars addressing the problem, but wouldn't it have made much more sense to have engineered a product WITHOUT such a glaring and frequently occurring problem? Do you understand where I'm coming from? It's disrespectful of M$ to put a product onto the market and expect gamers and loyal fans to spend hundreds of dollars on a product M$ knew was inherently flawed from day one.

    They've addressed the issue, and it now occurs LESS frequently, but the fact that it was happening so often in the beginning, and that it's still happening now is sad, and a shameful business move on the part of M$. By the way, at least four of my friends have had the RRoD happen, and not one of them ever had their PS2s or any other console tank on them. Just think about that for a second or two.

  • kakashi6666

    Posted Jul 26, 2009 3:52 am PT

    @bennae66

    same here mate mine worcks fine and am on it all the time iv got the same one iv had for the last 3 or 4 years and its still working fine so not all xboxs vrake ppl

  • hatieshorrer

    Posted Jul 26, 2009 1:52 am PT

    @tonicmole

    So your complaining that MS had to spend money to make money and that that thinking resulted in the recession. I hate to say it but the only thing MS didnt do right this generation was release a console as fragile as the X360. They sold it for a profit early and used that money to buy and make exclusives putting programmers to work which actually helped the economy. The problem is companies making risky investments that dont guaranty a return such as AIG.

  • ymeanger

    Posted Jul 26, 2009 1:29 am PT

    Always been an Xbox fan and forever will be...
    Have two PSPs but is never the same as LIVE
    Keep up the good work MS... you bring out the giggity in me lol

  • bennae66

    Posted Jul 25, 2009 10:40 pm PT

    wow looking at these forums youd think 360's never work. why, at well over 6 hrs use per day (my gf uses it, all movies played on it, plus i live for live) why am i lucky enough to get the only one that works? i dont get issues with games, i dont have issues with the controller. normally i have bad runs buying tech. maybe i got lucky?

  • bennae66

    Posted Jul 25, 2009 10:37 pm PT

    considering the pre fabricated 'crisis' the world is in, MS are doing incredibly well. keep up the good work! i dont like microsoft, but i love xbox

  • XeonForce

    Posted Jul 25, 2009 1:49 pm PT

    Isn't funny how these acticles bring out the worst in people?

    I'm more of a PS3 guy, but this isn't the time or place to say anything negative about a competitor, especially in the economy we're dealing with.

  • acsam12304

    Posted Jul 25, 2009 10:33 am PT

    @XanderZane

    the Dream Cast was one of the best systems there was. it was like the PS2 at the time. and it did had its good games for it. one of my old time favorites was Toy Commander.

    SEGA is not that good now then it was. they just milked sonic thinking if they slap on the name sonic on the cover it will sale like billions and billison. but it didnt cuz they just rushed the games and didnt do anything to them.

  • Scarshi

    Posted Jul 25, 2009 6:47 am PT

    Profit and Loss. Only reason for these consoles is because they know we want them, and they can make money from them. Like anything these days, its all about money. I spend it, they make a profit to spend more, for me to spend more, on and on. I do love my xbox 360, and I do look forward to the next gen console, but really ... is it ever just about having fun gaming anymore? Never was I'm afraid, that's the sad truth.

    We fall down, to learn to pick ourselves back up.

  • tonicmole

    Posted Jul 25, 2009 5:39 am PT

    @kakashi6666 You ever really love a band ,but then once they become famous they suck. It's because when they suddenly have all the money in the world they just don't give a crap anymore. Try saying "butter buddy" over and over. Just because you can say it a first does not mean you can keep it up forever. I love the 360, but the business around it is foolish.

  • tonicmole

    Posted Jul 25, 2009 5:28 am PT

    @hatleshorrer Yes, Xbox made money, but only through shoveling billions of dollars into it. They and many other corporations have been using the power of money instead of brains for along time and now we are beginning to see the problem with this. One way to save a billion dollars would have to redesign the 360's GPU set up after the failure rates sky rocketed, but they didn't. They instead decided to wait it out, and the effects will be more then evident in the up coming years. Economically this is all related. The economic melt down is because of this behavior. Whether it be cars, banking, or electronics, these CEO's use money made in the 80's and 90's to make unintelligent and ill-conceived ideas profitable, but it only can go on for so long. Any body can use 5 billion dollars to make 5 billion more, but without intelligent fore sight the house of cards will eventually begin to fall. Also I believe that Sony is doing the exact same thing. Bush crippled our government by using trillions of dollars to fight terrorism instead of brains. It worked great for 7 and 1/2 years, but you can only run blind for so long.

  • chaisemon

    Posted Jul 25, 2009 5:08 am PT

    lol.. sory xbox does hav usb ports.. i just forgot abot it cos its covered all the time.. lol

    well, as long as they make profit.. i dont think they care about upgrading it for better sales.. @kakashi6666
    sony does give u out a new ps3.. i dont realy know y. they gave me a new one wen i sent in my old broken ps3.

  • canaries1

    Posted Jul 25, 2009 2:32 am PT

    Perhaps he spelt correctly kakashi6666. And the same thing happened to me so he's telling the truth.

  • kakashi6666

    Posted Jul 25, 2009 2:02 am PT

    y wuld they giv u a new one wen u r warrenty ran out no company in there ryt mind wuld do that

  • wars45

    Posted Jul 25, 2009 12:56 am PT

    my ps3 broke at xmas rang sony up and they swaped it for a new 1 and the warranty had run out .i got the new 1 in 2 weeks so i was happey with them

  • acsam12304

    Posted Jul 25, 2009 12:14 am PT

    @hatieshorrer

    yeah man i mean you can lie about that if you do then you are going to put the company in a law suite. i told him to sue to get his 360 fixed cuz its still under warranty. but him being 16 and his dad is like a jerk dont really give a damn cant really do anything

  • hatieshorrer

    Posted Jul 25, 2009 12:10 am PT

    @acsam12304

    Wow your the second comment Ive read today of some one that has a friend that tried to get their X360 repaired and MS wormed its way out of repairing it. The same thing happened to a friend of mine when the MS person he reported his RROD to acted like they didnt know about the three year extended warranty. He argued with her and she apologized and made arrangements to have his X360 repaired but still that is a poor way to do business.

  • acsam12304

    Posted Jul 24, 2009 11:54 pm PT

    @KreepLX

    yup all of our law makers are in bed will all the lobbyist and all the state and federal union workers, and big CEOs, isnt the American dream such a wonderful feeling

  • acsam12304

    Posted Jul 24, 2009 11:50 pm PT

    i know my friend who has his 360 for 2 years and his 360 got RROD like a few weeks ago. when he called M$. they said no that his 360 was registered 4 years ago. he was like WTF! he got it bran new with the seals on the box and everything. and still he found proof that its only 2 years old and still M$ said he got it 4 years ago. some M$ being such a hero that all the x-bots say that M$ is huh?

  • heyorange

    Posted Jul 24, 2009 11:46 pm PT

    i'm on you with that and i got an xbox with disc scratching abilities. i've bought 2 xboxs in the past 6 months. 3 overall.
    too much time and money has been spent on the problems.

  • Zerobeam

    Posted Jul 24, 2009 10:26 pm PT

    People are putting up posts saying that M$ has put up so much money for RRoD issues, and its a free repair. That's the least they could do. They don't get congrats on doing that, they shouldnt've knowingly released a faulty system. But why doesn't M$ offer a free repair for any of the other problems that their console has. I know for a fact I don't have the only console that scratches discs. And M$ says it'll cost $100 to "repair" the console amd $20 a pop to get each game replaced...

  • BenBenBen93

    Posted Jul 24, 2009 7:50 pm PT

    did better than Sony anyways. not saying am a fanboy but ifeel sorry for Sony in the entertainment business at the moment. TVs are nolonger the best. computers are crap. the ps3 cost to much to make and thus even at its high price making no profit on it. The walkman phone has been badly hit by iphone.

  • MagicOneUp

    Posted Jul 24, 2009 6:45 pm PT

    @TongLong
    Are you living in a cave? MS spent a billion dollars to fix defected 360's. its a thing of the past. stop moaning and crying. Sales are down in this time of financial downwards, like everywhere you read. MS is making money but just not on the same level like last year. Sony is losing money...

  • MagicOneUp

    Posted Jul 24, 2009 6:39 pm PT

    @chaisemon
    Something more thats not needed is NOT better! i bought the 360 for it better games and its has not disappoint me. i dont want/need blu-ray and i dont have to pay for it. i dont need a hard drive, i dont have to pay for it. i dont need bluetooth, i dont have to pay for it. get your FACTS right, 360 has 3 usb's, it has backaward compatibility to most xbox games, not like the newer ps3 equals none. Have you ever play Mirror's Edge with your own music playing in the background ( i have trance playing all the way, suits the game perfectly) bet you can't with the ps3.

  • rasterror

    Posted Jul 24, 2009 5:48 pm PT

    Even breaking even in this economy is good but to make a profit is great.

  • Chunky_Tomster

    Posted Jul 24, 2009 5:33 pm PT

    XBOX FTW

  • Max1363

    Posted Jul 24, 2009 4:02 pm PT

    Go XBOX division!!

  • Spryt posted Jul 24, 2009 3:19 pm PT (does not meet display criteria. sign in to show)

    Spryt

    Posted Jul 24, 2009 3:19 pm PT (hide)

    The 360 isn't as bullet-proof as some people beleive, here's the truth. The 360 community needs to blame theirselves, begging Microsoft to flash the cash to secure ports & exclusive DLC

  • ace-of-spades93

    Posted Jul 24, 2009 3:17 pm PT

    @chaisemon
    Bluetooth. seriously?

  • NuKkU

    Posted Jul 24, 2009 2:55 pm PT

    thats cool

  • MrHanky35

    Posted Jul 24, 2009 2:45 pm PT

    TongLong-"You hit the nail on the head. My PS2 that I picked up on release day STILL WORKS, as do my N64, Gamecube, and Dreamcast. So WHY, in the "next gen" does the 360 still tank so much?"

    im on my second Ps2. my n64 just broke. on my 3rd 360 though . but i play my 360 probably more than i did my PS2's, N64, gamecube,dreamcast combined. of cource that might just be b/c its my first online console... but your point is made

  • thenephariouson

    Posted Jul 24, 2009 2:29 pm PT

    There is no doubt in my mind that MS realise and accept that they made mistakes by sourcing cheap CPU's when making the 360. I totally agree with a number of posts here regarding MS's ability to produce a solid gaming platform, they have already demonstrated their ability to produce such a system with the original XBOX (which was very solid). They simply need to ensure their next system is built with A class parts and no 'corner cutting' therefore reinstilling confidence and redeeming their reputation. When it comes to the next gen of consoles, i will (as always) take a look at which platform appeals to me the most before handing over my hard earned cash, if that happens to be an MS console then so be it.

  • Kurzicide

    Posted Jul 24, 2009 2:21 pm PT

    Bashing on the 360 even when they repair RRoD for free... Hmm. Can anyone last a week without video games anymore? They basically fixed the problem already, and if you have the new motherboard and still getting the red ring, maybe you should try a different set-up than that closed-up, unused section of your entertainment center. It's questionable why people buy new 360s when they get the red ring, instead of getting it fixed for free.

    @chaisemon

    Speak proper english atleast. It has 3 usb ports already and they have also stated that they aren't making a blu-ray reader for it. Why would competitors help each other?

  • chaisemon

    Posted Jul 24, 2009 1:54 pm PT

    the box needs new hardware features like bluetooth and built in wifi and maybe even a usb port and card readers.. and backaward compatibility... i wud definetly buy another if they bring out an all in one box! but i gues blu ray reader is a no go! stil!!!! something is better than nothing!

  • zenfar

    Posted Jul 24, 2009 1:49 pm PT

    Get the 60 gig X-Box has the new mobo and it rocks!

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