Microsoft´s Revenues Higher Than Expected – Slashes Xbox 360 Forecasts

Kirjoittanut: Livegamers


Microsoft has announced revenue figures for the second quarter that ended December 31st, 2006. Wall Street analysts expected lower revenues due the costs relating to product launches of Windows Vista and the new Office Suite. However, the good performance of Entertainment & Devices and Server & Tools divisions helped Microsoft reach a record revenue.
Net income was $2 626 million (2 036 million EUR) and 28 % lower than the same quarter last year. Lower income was the result of over billion dollar investments to Vista and Office software. Revenue was up 6 % to $12,54 billion (9,7 billion EUR). Markets were expecting sales of about $12 billion. Microsoft expects the revenue to be in the range of $13,7 billion to $14,0 billion for the next quarter and $50,2 billion to $50,7 billion for the full fiscal year ending June 30th, 2007

Entertainment & Devices Division, containing the results of Xbox 360 sales, had negative operating income with figures similar to last year. The division made a loss of $289 million (224 million EUR) although the revenue was up 76 % to $2,96 billion (2,29 billion EUR). These numbers are not comparable to last year´s results due the launch of Zune media player.

Microsoft is being cautious about the second half. The company cut down on the forecast of Xbox 360 shipments for the end of its fiscal year. Previous forecast of 13 to 15 million shipments by the end of June 2007 was lowered to 12 million. According to the company´s CTO Chriss Lidell there is a reasonable amount of Xbox 360 inventory in the sales channel. Some of the already shipped 10,4 million units therefore still waits in stock to be bought by the consumers. Microsoft also tries hard to keep it´s promise to turn Entertainment & Devices Division profitable in the fiscal year 2008.

Some of the market analysts believe that Microsoft renews the shipment forecast, because it wants to lower retailers´ stocks of consoles before price reductions of the Xbox 360.