Microsoft earnings up, Xbox closes losses gap

Microsoft today released its earnings report for its fiscal fourth quarter ending June 30. The report showed a 9 percent increase over the same period from a year ago. Quarterly income jumped from $2.69 billion (25 cents per share) in 2004 to $3.7 billion (34 cents per share) in 2005.

For the year, the company reported record revenue of $39.79 billion, an 8 percent increase from the $36.84 billion Microsoft pulled in last year. Net income was $12.25 billion and $8.17 billion in 2005 and 2004, respectively.

Things look promising in the Home and Entertainment division, the Xbox-producing sector that's been costing Microsoft money in recent years. Though the division is still in the red, it's shown a 22 percent growth over the last year. Losses for the quarter went from $340 million in 2004 to $179 million in '05, and for the year, losses went from $1.2 billion to just $391 million.

Due to production costs and the competitive market, Microsoft actually loses money on each Xbox sold. Currently, the retail price for an Xbox is $149.99.

For the upcoming year, Microsoft expects total revenue in the range of $43.7 billion and $44.5 billion, with operating income falling somewhere between $18.3 billion and $18.8 billion.

This near future for Microsoft will see the release of two major products for the company. This holiday season, the company is releasing the first of the next-generation consoles, the Xbox 360. In the second half of 2006, Microsoft will release its new operating system, which was dubbed "Windows Vista" today.

Microsoft (MSFT) was trading at $25.66 as of press time, which was slightly under its opening tally of $26 per share.