370°

ValueAct Still Pursuing A Microsoft Board Seat, Wants To Sell Off The Xbox Division

Steve Ballmer just announced his retirement, and the CEO of Microsoft has decided to call it a day within the next 12 months. The head of Redmond had been under fire from several circles, former employees, media and investors.

Back in April ValueAct spent $2 billion in order to take over 1 percent stake in Microsoft. And now gossip is flowing that the investment firm may be pushing for some big changes within the Redmond campus.

A top Microsoft analyst reveals that ValueAct is still pursuing a seat in the company’s board of directors.

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eyeonwindows.com
DEEBO4330d ago

well that sucks.even though i like sony more then MS.i hate see console makers go,hopefully this never happens.maybe this was the plan from the beginning.build the xbox brand up then sale it.

Bigpappy4330d ago

You don't even need to read the article to know that what you are implying is not the case. Just read the title and the summary.

JokesOnYou4330d ago (Edited 4330d ago )

Yeah 1% and they want them to sell the division...sounds like some nutjobs trying to make some quick cash. Not going to happen, expecially since Xbox brand unlike Zune and other investments that have failed.

MWong4330d ago (Edited 4330d ago )

Well if enough boardmembers get behind ValueAct and they get a seat on the board of directors it doesn't matter what percentage of stake they have in M$. They just have to convience the a majority of the board that the XBox division isn't profitable. The lack of a solid vision and leadership of the division would make that easy to argue.

I doubt they will get on the board though, but if they do I wonder who might buy XBox.

Anon19744330d ago (Edited 4330d ago )

The question isn't is the Xbox profitable. The question the board has to ask themselves is is the Xbox profitable enough. Could that money be better spent? That's what ValueAct does. They come in and work with the boards of company's to get them the most bang for their buck. They simply don't think that for Microsoft they're getting their money's worth out of any of their devices, Xbox included, compared to the returns they see from other divisions. They aren't alone in thinking this either, as other board members and analysts have been saying this long before ValueAct became involved.

Edit below: And he's dismissing the fact that ValueAct isn't in this alone. They'd just be adding their voice to those who've been calling for this for some time now but have been blocked by Ballmer.

HiddenMission4330d ago

@JokesOnYou

I guess the jokes really on you considering that nut job you speak of is an investment company that spent 2 billion dollars let me repeat that 2 billion dollars for 1% and will be getting a seat on the board of directors.

Over the years many investors have not been happy with the profit/loss margin that the XBOX brand earns/loses. They have been calling for Balmer to be removed for several years and XBOX to be sold off.

With the new director from the investment firm and Balmer retiring there is a very good chance that XBOX end up becoming a separate company...which means no more massive spending for exclusives. Essentially the XBOX brand would be in the same boat as Sony and Nintendo so the fields from a capital point of view would be more level than ever.

Bigpappy4330d ago

Seems like too many of you are getting ahead of yourselves here.

@ HiddenMission: The article clearly states the ValueAct is STILL PURSUING a seat on the Board. They are not on the board yet. And if they do get on, they with have one vote, but will obvious have more say. But they are not on the board.

@ darkride: Most of what you are saying makes sense to me. But ValueAct has no say in whether Ballmer stays or goes.

You guys are acting like Patcher here. You are looking at a few fact and trying to fill in the blanks. But there is no way to predict Who will replace Ballmer and how much influence ValueAct will have over the running of M$. So you should all make it clear that you really do not know how this will affect Xbox, except for the fact that Ballmer was a huge supporter.

You guy also ignore an even bigger supporter of Xbox (Bill Gates). He still owns more shares and has more influence over M$ than anyone else.

MWong4330d ago (Edited 4330d ago )

@ darkride66
Well said, +1 bubble

@Bigpappy
I don't think anybody is getting ahead of themselves. I think people are just stating possiblities. Especially, based off your initial comment to the OP. Bill Gates doesn't run M$, the board of directors run the company. The majority vote will decide the fate of the XBox, if it ever came to a vote.

Honestly, while I would hate to see the XBox go. However, I do think some of their money could be better allocated. $100 million for the controller design to make it look like an improved 360 controller. Not to mention the amount of money they have spent on R&D for the E3 XBone model. To just change it and spend more R&D money. Not to mention, paying for exclusives.

Bigpappy4330d ago (Edited 4330d ago )

@ MWong: When you reply to my comment please make sure that what you accuse me of saying is what I did say. I never said Bill Gates run Microsoft.

Now you also state that the board of directors run M$. If that is true, why did they not have Xbox as a separate company while Ballmer was CEO? No the do not run M$. It is run buy the CEO and the chairman. The board gets to pick who runs the company, but they do NOT run it.

The next CEO gets to decide the fate of Xbox business.

Diver4330d ago (Edited 4330d ago )

Well jokesonyou you don't realize that 1% makes them a top investor. Also they ain't alone on this.

If errr, when the Xbox has a bad start this gen it could force investors looking at bad office and windows sales to push the issue through.

Overall Xbox has yet to turn a profit. They're still down from the first box days.

Startin with attacking opengl to ram directx down our throats Microsoft is the worst thing ever to happen to gaming.

Christopher4330d ago

@JOY: Actually, this isn't the first time that board of directors people (or shareholders) have discussed selling off the Xbox division. The reason? It's one of the least profitable divisions in the company but has one of the highest expense rates outside of software divisions.

JokesOnYou4330d ago (Edited 4330d ago )

All I see here is SPECULATION with nothing even close solid to go on, no different then speculation sony would split the ps division. No coincidence people giving a firm who has 1% stake and currently no board seat in a huge corporation so much weight are the usual suspects. Nothing to see here but wishful thinking really.

Here's some black and white facts for all the speculation:

"Microsoft Profits Up, Xbox Division Up 55%"

"The bold bets we made on cloud services are paying off as people increasingly choose Microsoft services including Office 365, Windows Azure, Xbox LIVE, and Skype," said Microsoft CEO Steve Ballmer. "While there is still work to do, we are optimistic that the bets we’ve made on Windows devices position us well for the long-term."
http://www.vgchartz.com/art...

-I SPECULATE that based on these latest financial FACTS micro will now commence their world domination plan to take over the planet, or maybe just continue to support the Xbox brand. Who knows? lol

JohnnyBadfinger4330d ago

It's bad enough having Microsoft in charge of Xbox if it were sold I'd put my money on activision or EA even Ubisoft as the main publishers they could make heaps from having their own console.

morganfell4330d ago

There is a reason they want to divest themselves of the division. Here are thre pieces of info from Gaf:

http://i.imgur.com/UwdTasL....

http://i.imgur.com/ZUJHD.pn...

And the third piece is from a post where the individual stated that it should be considered how the Xbox division will be viewed early next year post initial launch. If Sony appears to be widening a lead it could drive some radical changes.

4329d ago
+ Show (10) more repliesLast reply 4329d ago
Anon19744330d ago (Edited 4330d ago )

It's no secret that other board members and investors have long had the knives out for the Xbox. Looking at it from a business perspective, even though the Xbox makes money now the return on money invested is paltry compared to what we see coming out of Microsoft's other divisions. You can understand why they might want to see it go when the capital could be spent boosting a much more profitable software division. But Ballmer was always the reason that this talk never went anywhere. He was a huge Xbox supporter. And now he's gone.

With ValueAct now adding its considerable influence to a board that was already unsure of the Xbox but held in check by Ballmer that leaves the division on shaky ground if the Xbox One fails to deliver, and with Windows 8 not exactly taking off and PC sales continuing to slump, Microsoft despite making obscene amounts of money could suddenly start to feel the pressure.

There's already been a number of analysts sounding the alarms regarding an uncertain future for the company. That's not saying they're in danger of going bankrupt or any such nonsense, but who knows what the company will look like even 5 years out.

So the question is, if Valueact and other board members get their way with the XBox, what then? Will it be spun off into it's own company, relatively intact or simply sold? And if sold, to who? When the analysts started talking again about the Xbox division being sold recently, Samsung was the name most often thrown about.

I wouldn't write off the influence that ValueAct has over the company. It's already being speculated that they're the once who've forced Ballmer out, and they don't even have their board seat yet. And they'd just be adding their voices to the others that think the Xbox divisions money could be better spent on a more profitable division, but have been held in check by Ballmer over the years.

vigilante_man4330d ago

Samsung make great hardware. We could see amazing hardware from both Sony and Samsung.

We need competition, where ever it comes from. This summer has taught us that.

TheTwelve4330d ago

You're speaking too much sense too early on these pages, bro! As much as Xbox supporters say this is a Sony-site, you will see them come out to disagree with you on this!

Ripsta7th4330d ago (Edited 4330d ago )

Xbox brand isnt dying anytime soon
@TheTwelve -you should be grateful he isnt right because if samsung takes over xbox its game over for sony Lol

Anon19744330d ago (Edited 4330d ago )

No one says the XBox is dying. That's not what this is about. The problem that shareholders and others on the board had was how much the Xbox division was profiting compared to capital invested with other divisions.

To simplify what we're talking about there, If you have two different revenue streams going into two different divisions and one revenue stream is making you 20% return and the other 5% return, it just makes sense that you may consider switching both streams into the division making bigger returns. With Microsoft, there are a number of divisions which would produce more returns for that invested capital, which analysts and board members have been pointing out for years but were blocked by Ballmer.

ValueAct "sourcing investments in companies they believe to be fundamentally undervalued, and then working with management and the company's board to implement strategies that generate superior returns on invested capital." It's all about more bang for your buck, and any business would be foolish if it didn't reassess it's invested capital versus returns from time to time. If it were just ValueAct saying this, you could probably just ignore them, but this has been simmering well before ValueAct made their move.

It has nothing to do with the Xbox brand "dying" or even being in danger. The question is, could Microsoft be spending that money better elsewhere, and many have long thought they could but have been stopped by Ballmer who just presided over the worst quarter the company has seen in recent history. And now he's stepping down.

Edit: On a side note, I'm surprised no one has chimed in yet and said "But..but Sony!" Usually, you can't discuss a company's financials without someone trying to shift the conversation to Sony's ongoing troubles.

TheTwelve4330d ago

@Ripsta7th

--- It was supposedly "gameover" for Sony when Microsoft entered. I recall recommendations that people sell Sony stock when Halo 3 came out...

...and now we find ourselves here, today.

I'm not worried about Sony. They know how to battle.

12

Deadpoolio4330d ago

I'm sorry I stopped reading after Valueact and considerable influence...When you have a 1% stake in a company you have NOTHING...Most companies don't even let 1% shareholders attend the meetings let alone would they ever even consider listening to anything that came out of a 1% stakeholder's mouth

creatchee4330d ago (Edited 4330d ago )

@TheTwelve

"--- It was supposedly "gameover" for Sony when Microsoft entered. I recall recommendations that people sell Sony stock when Halo 3 came out...

...and now we find ourselves here, today."

Halo 3 came out in September 2007. Sony's market cap was $54 billion in December 2007.

Today, Sony's market cap is $20.43 billion.

Selling Sony stock would have been an extremely good move if you did so before Halo 3 came out. Just saying.

TheSauce4329d ago

Samsung would probably love to buy xbox. They've always said that one of their goals is to have a step-up in the western market. Xbox is pretty much North America so buying them would be a huge bone for Samsung.

+ Show (5) more repliesLast reply 4329d ago
kewlkat0074330d ago

" $2 billion in order to take over 1 percent stake"

Dayummm

Mystogan4330d ago

Microsoft selling their Xbox Division will never Happen. Its a multibillion dollar business, These guys are pretty dumb if they really think that.

PlayStation_44330d ago

Samsung may be a nice console hardware manufacturer

Eddie201014330d ago

Selling the Xbox division to another company would be the best thing to happen to the gaming industry. Still would have the competition without the take over the world attitude that Microsoft has.

hqgamez4329d ago

Sorry to break it, but its probably the truth. MS spends most of the money trying to market the game console everywhere and purchase exclusives and dlc because they want to hurt the others reps.
if you think back towards the gta iv dlc for 50 million, that is a bunch of money, deals like COD dlc 30 days is private because that is probably some 100million plus deal, fifa 14 on every X1 EU (EA must been paid!!)
they hope they can build a name by buying off stuff to bring the fans which is the wrong way. even tho they brought some in. it's not working. They believed they own this generation and introduced the Xbox One with policies that users will follow and become a cash king. This is probably where they hoped to dominate and flow cash. Now you see how that went.

+ Show (4) more repliesLast reply 4329d ago
markbob4330d ago

Im sure MS will do exactly what Sony did and tell the "activist investor" to take a hike

lastofgen4330d ago

I agree.
I'm glad sony told the other guy off and I hope ms does the same with these new valueact people.

Prophet-Gamer4329d ago

MS isn't the same company as Sony and the implications of the two are different. MS makes a ton of money off of their Enterprise division with Windows, Xbox represents a tiny part of their revenues. If you look at it that way, selling off Xbox or spinning it off would be good for the company.

On the Sony side, PlayStation is one of the few profitable things inside Sony, they haven't made money in years. Iirc Loeb wanted to do was split the entertainment side from the hardware side which would have made him tons of money but pretty much destroyed Sony. Selling off Xbox wouldn't make so much as a dent in MS, in fact it may help them free up money to invest in their OS side. Splitting Playstation from Sony would have pretty much ended a good portion of Sony.

Thatguy-3104330d ago (Edited 4330d ago )

"We've always had different competitors, we were in the space before Microsoft and we may be in the space after Microsoft,"
Like Sony said that they see competition come and go.
http://www.computerandvideo...

Belking4330d ago (Edited 4330d ago )

I'm sure they said similar things about Samsung and Apple too...lol

n4rc4330d ago

1% doesnt hold much sway.. just because they have backing on one issue doesnt mean xbox is going anywhere

Anon19744330d ago (Edited 4330d ago )

It's more than just ValueAct though. Analysts, other board members and investors alike have long been mulling the value of the division to the overall company. The only reason that talk never went anywhere was because of Ballmer, and now he's stepping out. ValueAct would already be adding their voice to the voices already calling for this. And if the Xbox One doesn't meet expectations, you can be damn sure these voices are going to be heard with no Ballmer to protect the division.

It's already speculated that the reason Ballmer is stepping down was due to ValueAct looking to force him out otherwise. I wouldn't write off the impact they could potentially have on the company, especially when they aren't alone on the board in thinking that something better could be done with the money currently being invested into the Xbox.

Edit below: Are any of you even listening? This has nothing to do with Xbox not being successful. You all forget, they're being measured against the rest of Microsoft's divisions which are making obscene amounts of profit while they aren't. That's what this is all about. Microsoft getting the most bang for their buck.

thetruthx14330d ago

@darkride66 you sound silly Xbox ain't going nowhere except a bigger user base in near future

kewlkat0074330d ago

All the Xbox brand has seen is growth from one gen to the next..No longer in the red year-on-year.

What board member would not be happy..

tokugawa4330d ago (Edited 4330d ago )

edit forget it

gamer20134329d ago

Here's someone that wants to see MS leave the gaming industry.

Prophet-Gamer4329d ago

The amount of people disagreeing with you is insane. seems a lot of people put their fingers in their ears and refuse to listen. Apparently, some of the people on this site know better than top business analysts and billionaire investors.

+ Show (2) more repliesLast reply 4329d ago
jukins4330d ago

whenever some investor with a lot of shares wants to sell off a division its always for the quick payout instead of trying to have money constantly trickling in over a long period. its sad thats how things work.

Show all comments (96)
190°

Xbox Mass layoffs Are Expected To Hit On July 2, 2025

The previously rumored mass layoffs at Xbox are expected to happen on Wednesday, July 2, 2025, according to a new rumor.

Read Full Story >>
twistedvoxel.com
13h ago
lukasmain9h ago(Edited 9h ago)

They will have fired close to 20,000 people all up after this round of lay-offs coming, since the ABK deal announcement in January 2022. Shocking really

January 2023:
Microsoft laid off 10,000 employees, which was a significant workforce reduction.

January 2024:
Approximately 1,900 gaming employees were laid off following the Activision Blizzard acquisition.

May 2025:
Microsoft announced a further 6,000 layoffs as part of an organizational shift.

June 2025:
Additional layoffs, including 650 in the gaming business, focused on corporate and support functions

8h agoReplies(2)
Obscure_Observer7h ago

"They will have fired close to 20,000 people all up after this round of lay-offs coming, since the ABK deal announcement in January 2022. Shocking really"

It's not that shocking considering these numbers aren't just Xbox numbers as you're deliberately trying to make it seem for some reason.

Interestingly, another no shocking fact is that whenever Microsoft releases its quarterly earnings reports, you're quick to point out that those numbers aren't exclusive to Xbox. Yeah... go figure.

Ganif5h ago

They also fired around 2500 people across Microsoft's gaming divisions and Zenimax shortly after buying it, and before they closed down 4 studios including Arkane and Tango.

I remember Satya boasting about how compassionate he was for splitting the list 50/50 across the two companies.

5h ago
Obscure_Observer3h ago

"They also fired around 2500 people across Microsoft's gaming divisions and Zenimax shortly after buying it"

Bring your sources. I´ll wait.

1dmj1h ago

He doesn’t have any sources lol

He also forgot that Sony does layoffs too

Hereandthere6h ago

Let's hope its not as bad as socials are making it, good luck to those that unfortunately lose their jobs.

6h ago
Lightning775h ago

Could be not as bad could be horrible. But it's Ms so I'm expecting the absolute worst.

-Foxtrot5h ago

Sometimes I feel like they brought in Sarah to take the heat away from Phil.

Phil has always stuck his nose into everything Xbox related when it's something positive or at least neutral but as soon as they went the multiplatform root he's stood back and let Sarah do most of the talking in terms of PR. Now they are doing the same with layoffs.

The person who should be let go is Phil himself.

RhinoGamer882h ago

Phil and his inner circle of circle jerk bros like AG.

Obscure_Observer2h ago

"Phil has always stuck his nose into everything Xbox related when it's something positive or at least neutral but as soon as they went the multiplatform root he's stood back and let Sarah do most of the talking in terms of PR. Now they are doing the same with layoffs."

You have no idea what you´re talking about.

*IF* Microsoft decides to address the upcoming layoffs, Matt Booty will be the one in the spotlight since he is the president of XGS.

Phil will probably be on some bs drama later doing interviews telling people how "devastated" and "sorry" he is for those affected while wiping away his tears with money.

Sarah is the President of Xbox (hardware) so she will be better off taking care of hers business and let both Matt and Phil face the backlash.

Show all comments (19)
240°

‘I think Xbox hardware is dead’, says Microsoft gaming veteran

One of the founding members of the Xbox team has questioned Microsoft’s multiplatform gaming strategy, and said they believe the Xbox hardware business is effectively “dead"

Read Full Story >>
videogameschronicle.com
2d ago Replies(3)
Goodguy012d ago

Think that rumor that they'll still make a new console but at a profit at $1000 will be true though. The series consoles will remain their cheap alternative throughout next gen I would say. Keep in mind that game pass and pretty much going 3rd party is their main focus. They want to bring xbox everywhere.

2d ago
GamerRN1d 9h ago

If they don't maintain some kind of console presence, I think they will lose gamepass subscribers and just become a 3rd party publisher who eventually sells everything off

Cacabunga1d 8h ago

Xbox games are releasing on all platforms. Who needs this hardware? PS or PC is all you need

Flewid6381d 7h ago

I've never owned an Xbox in my life and I have GamePass.

thorstein1d 6h ago

The only Xbox I owned was the 360. I have gamepass for my PC.

GamerRN1d 1h ago

Majority of Gamepass users are currently on console...

+ Show (1) more replyLast reply 1d 1h ago
crazyCoconuts1d 7h ago

Even if they could get it down to $800 for a box that can run with comparable performance to a PS6 (at, say $200 cheaper) the population of people willing to buy such a thing would be so limited.
It would be the worst of both worlds.

2d ago
Futureshark1d 18h ago

A slow, painful and public death too.

Show all comments (66)
300°

Looming Xbox layoffs threaten Microsoft's reputation

Even as the company sets out to overhaul the very definition of Xbox, cuts at its studios risk creating a negative image reminiscent of EA's worst era

Read Full Story >>
gamesindustry.biz
Jingsing4d ago (Edited 4d ago )

I appreciate the article but this guy must be living in a delayed universe, The reputation was ruined 10+ years ago and hasn't recovered since. As such people have voted with their wallets and stopped buying Xbox products in large amounts.

YourMommySpoils3d ago

Their reputation was lost way before that. From the moment Microsoft said they entering the console business, we all knew it would be a downgrade.

Bathyj2d ago (Edited 2d ago )

That's not true at all the OG Xbox had drive and they had hunger and they wanted to accomplish something. It was a great console.

they didn't quite reach their goals and they gave up prematurely because they couldn't win. It was halfway through the Xbox 360 when kinect released and that was when they lost their way and we're a rudderless ship ever since

Agent752d ago

In all fairness, Xbox had some great games with online play, Xbox 360 even better. Xbox consoles started to die with the Xbox One. Ditch consoles for the PC and PS.

YourMommySpoils2d ago

@Bathyj hard to compute ay. Xbox was never better than a PC and that's all they ever were. A demo box. Doesn't get more true than that.

4d ago Replies(1)
isarai4d ago

What reputation is this threatening exactly? 😂

Lightning774d ago

Rumors of Turn 10 being either shut down or hit with massive lay offs is on the horizon.

The issue is MS will do something right only to do something very, very wrong. And they do this what seems calculative at this point. Doesn't matter what they do the Investors and leadership want more and more money an endless bottomless pit of purr insatiable greed. A company that acts like it's broke or hurting is what really, really infuriates me. They've surpassed apple again well over 3 trillion who acts like they're a million dollar company is fk stupid. Pivots and changes for no reason and can't do things for more than a year with out a pivot or changing their metrics.

Christopher3d ago

That would be really bad since Phil just hyped up next year as a big Forza year at Summer Game Fest.

1Victor3d ago

@christopher: “ That would be really bad since Phil just hyped up next year as a big Forza year at Summer Game Fest”
The key word big can be ether good or bad 🤷🏿only time can tell

DarXyde3d ago

First Forza being generated entirely via AI?

If any company would do it, it'd be them.

Nacho_Z2d ago

Isn't the point that it's irrelevant how profitable MS is, the suits have decided it's time that the Xbox division started making them money. Hence the layoffs, the pivots.

hennessey862d ago

That wouldn't surprise me, as motorsport has been heading down hill since the great number 4. Where as playground have consistently put out better games. I think the two studios will be merged under playground games banner.

3d ago Replies(2)
Show all comments (63)