Xbox Division Posts Second Straight Profitable Year

While Sony Computer Entertainment continues to struggle with the balance between pricing on PS3 and profitability for the group as a whole, Microsoft's Xbox business seems to be in fine shape. The Entertainment and Devices Division (which houses Xbox, PC games, and Zune) posted its second year of profit today for the fiscal year ended on June 30. Profit declined 66% from $497 million to $169 million, but it was a profit nonetheless. The division lost $130 million in the fourth quarter as revenues slipped 25% to $1.2 billion.  

Microsoft said that in the fourth quarter Xbox 360 and PC game revenue decreased 12 % to $110 million “primarily as a result of decreased Xbox 360 console sales and decreased revenue per Xbox 360 console due to price reductions during the past 12 months, partially offset by increased Xbox Live revenue.” Shipments were slightly down in the fourth quarter, as 1.2 million Xbox 360 consoles were shipped compares to 1.3 million during the fourth quarter of fiscal year 2008. 

For the full year, Xbox 360 and PC game revenue decreased $161 million (just three percent) and total Xbox 360 shipments were actually up from 8.7 million units to 11.2 million.  

Overall at Microsoft fourth quarter revenue fell 17%, annual revenue dropped three percent and net income fell 18% to $14.57 billion. That's pretty staggering – the company's profit dips 18% and it still generates nearly $15 billion!  “Our business continued to be negatively impacted by weakness in the global PC and server markets,” said Chris Liddell, chief financial officer at Microsoft. “In light of that environment, it was an excellent achievement to deliver over $750 million of operational savings compared to the prior year quarter.”