Microsoft's Xbox arm posts rare profit

Halo 3 spurs 360 sales, helps push entertainment and devices division to $165 million operating profit for fiscal first quarter.


Last July, Microsoft entertainment and devices division president Robbie Bach said the software giant's Xbox 360 segment would post a profit for the first time in the company's 2008 fiscal year. Microsoft reported its first-quarter results for the fiscal year today, and the blockbuster success of Halo 3 has already realized Bach's prediction.

Launched with mere days remaining in the first fiscal quarter (which ended September 30), Halo 3 raked in more than $300 million worldwide in its opening week, and $170 million within 24 hours of going on sale in the US alone. That helped push the Xbox 360 division's revenues for the quarter to $1.93 billion, about 91 percent more than it brought in during last year's first fiscal quarter.

Halo 3 also reversed the entertainment and devices division's money-losing trend, helping it turn the previous first quarter's $142 million operating loss into an operating profit of $165 million. Microsoft also benefited from not having its bottom line gutted by over $1 billion in charges stemming from the 360's now-notoriously high hardware failure rate, as was the case last quarter.

The rest of Microsoft also had a banner quarter, with the company as a whole experiencing its biggest first-quarter revenue growth since 1999. For the three-month stretch, Microsoft brought in revenues of $13.76 billion, up 27 percent year-over-year. Of that money, $4.29 billion was recorded as net income, a 23 percent leap over the previous first quarter.

For those following the next-generation console race, today also saw Sony and Nintendo post their latest financial results.

[CLARIFICATION]: The quarter ended September 30 was the entertainment and devices division's first profitable three-month stretch. However, the previous division to house the Xbox operation, the home and entertainment division, managed to turn a profit for the last quarter of calendar 2004, thanks in large part to the release of Halo 2.

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