Xbox Division Sees 66 Percent Slide in '09 Profit Despite 11 Million Units Shipped

Illustration for article titled Xbox Division Sees 66 Percent Slide in 09 Profit Despite 11 Million Units Shipped

Microsoft's Xbox division booked an eye-popping 66 percent drop in profit for the 2009 fiscal year, reflecting a terrible economy and mirroring steep declines across all of the software behemoth's business segments.

For the fiscal year, Microsoft's revenue from the Xbox 360 and from PC gaming was down $161 million, which the company mainly attributed to price reductions on its consoles over the past year. It was partially offset by increased revenue from Xbox Live and the rise in consoles shipped - 11.2 million in 2009 against 8.7 million in 2008. As a sign of the troubled global economy, foreign currency fluctuations were also singled out for a 1 percent revenue decrease in the fiscal year.

For the Entertainment and Devices division, the year-over-year picture looks bad. Microsoft EDD booked a 66 percent drop in profit - $169 million in 2009 compared to $497 million in 2008 - on a 6 percent reduction in revenue - $7.7 billion in 2009 to $8.2 billion in 2008.


But when comparing this quarter to the fourth quarter of 2008, before the collapse of the U.S. economy, the gaming side of the division did yeoman's work holding the line. And despite a 25 percent drop in revenue - largely attributable to non-gaming sources such as Zune and Mediaroom, the company's Internet protocol TV software - the division's $130 million operating loss for the quarter was actually 24 percent better than the loss posted in Q4 of 2008.

Decreased costs in the 360 platform, plus a 30 percent slash to sales and marketing expenses for it, helped stop the bleeding this quarter, the company said. For the year, the drop in profit was pegged to an overall revenue loss and, specifically, a 16 percent rise in R&D expenses, attributed to headcount from acquisitions associated with its Windows Mobile platform.

Company wide, Microsoft's fourth quarter profit was down 29 percent. For its fiscal year, the company's revenue declined - to $58.44 billion, which is a 3.3 percent decrease from last fiscal year's record of $60.4 billion. Net income was $14.57 billion, down 18 percent from $17.68 billion of a year ago.

Microsoft Reports Fourth-Quarter Results [Microsoft] [Image Credit]

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Very simple reason for this big a drop off. A little game called "Halo 3" was released in Fall 2007, the beginning of the prior fiscal year that this year is being compared to.

I seem to remember that game selling somewhat well, and I am going to take a wild guess that it being first party software and not hardware...that it was pretty profitable too.