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Microsoft's Game Division Suffers $1.89 Billon Shortfall

Entertainment and Devices Division sees a 47 percent increase in its annual operating loss, thanks to $1.06 billion in warranty-extension costs and slowing 360 sales.

Besides decreased Xbox 360 console sales, the EDD's fourth quarter suffered a catastrophic blow when then-Corporate Vice President Peter Moore announced a three-year extension of the Xbox 360 manufacturer's warranty. Today, the company confirmed it took a $1.06 billion charge as a result of the unprecedented move, causing operating losses for the quarter to tally a massive $1.2 billion--a staggering 183 percent year-on-year increase. The company said the loss was lessened somewhat by "decreased Xbox 360 console manufacturing costs" and "increased Xbox accessories and video game sales."

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gamespot.com
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fenderputty3474d ago

Vista that saved them in their 4th quarter.

Xeoset3473d ago

$1.2 billion of that was too extend the warranty to 3 years.

I wonder how much Sony are losing now they've dropped the price and the console still costs $700+ to make? Seriously.

Also, before you disagree with me using fanboy ways and such, save yourself the time to look like an idiot and just walk away from your computer, I'm sick of your kind.

EDIT: This isn't to the above profile either, I'm talking generally.

Mr_Kuwabara3474d ago (Edited 3474d ago )

inb4themassivebashingoffanboys

@PS360Wii

But nobody wants to waste millions (worst billions) on a console that has been around for quite some time and keep on losing money too just make a warranty or anything in particular on it. They want to gain lots of profit, not lose a whole bunch of the profit and win just a few if not anything at all.

Sure companies that make hardware devices tend to have these situations were there product is in need better there standards but they don't expect to lose a billion on fixing some errors.

That's why tests exist. The 360 was just rushed to the stores because MS wanted to be way ahead of the PS3. Which is a great idea for any company who does this, but if you don't make extensive tests of your products first, these situations tend to happen in a great loss. I never heard any news of the original Xbox having problems and it's because they stood there peaceful time testing what became a great console with hardly any defects.

MS just needs to be more alert on these things for next generation same as the Sony with there price. (But that's another story)

edit* Damn I can't belive I lost all my bubbles and I don't post anything fanboyish.....

Maddens Raiders3474d ago

Sometimes, modicums as well as lengthy, intelligent replies can lead to answers that folks don't like hearing. That's been my learning experience on N4G. Now mix that with a little immaturity and who can predict how people are feeling on a given day? -- It's all in the hand of fate.

+1 bubble up

cheers

PS360WII3474d ago

well I gave ya a bubble. That was a good post because it does seem like MS didn't give the 360 the testing it needed and the 2nd extended warranty is the proof.

I do however have to say that MS is not even close to ending the Xbox name. The users of Xbox love to buy games/movies/TV Shows/Extra Content/Arcade Games/ and any add-on they so choose to make. The profit is there to have it's just taking them a rather long time to get past the jitters of a new division. I don't think they are making money off of the Zune yet but they haven't pulled the plug on that(I did not check that out so if they did make money off of Zune I do apologize). There are many up coming games for the 360 that will be bought by the 11+ million out there and lets just see how many units are sold by the end of the year. No MS is not getting rid of there way into the living room not yet at least.

masterg3474d ago

Did MS ever make any money on the first Xbox?
What did the total number add up to there in dollars.

Shadow Flare3474d ago

$1.89 Billion in debt!!! I don't care if microsoft can afford it, no-one in that company will be happy about that. Will xbox 360 even make a profit? In all seriousness, on the whole microsoft does not know what they are doing when it comes to games. If they did, they would have made a profit. That IS the name of the game. They were in debt with the xbox 1, they have a $1.9 billion debt with the 360, i mean what the hell? If this were any other company, they would have cut bait and taken a hint a long time ago. It comes down to microsoft views the gaming industry like they view every other avenue of other industries: See what makes alot of money, copy it, buy everyone out...they don't EARN anything for themselves which is something Sony and Nintendo have respectfully done.

$2 billion may be a drop in the ocean or whatever for microsoft but its incredibly noticable to their business and shareholders. I think there was more to Peter Moore leaving then 'family problems'. And its quite the mess you've left the xbox 360 division in isn't it peter?

Maybe words won't do it, a picture may do instead:
Introducing...Microsoft's business model

the_round_peg3474d ago (Edited 3474d ago )

Microsoft financial data: http://finance.yahoo.com/q/...
-Market Cap = US 295.81 Billion
-Revenue = US $44.28 Billion
-Profit = US 36.63 Billion <= this matters more than revenue
-Debt = US 0 (= No debt!)
-Cash = US 25.48 Billion

Compare Microsoft to Sony:

Sony's financial data: http://finance.yahoo.com/q/...

Market Cap = US 51.65 Billion
-Revenue = US 67.78 Billion
-Profit = US 15.86 Billion <= this matters more than revenue
-Debt = US 8.96 Billion
-Cash = US 4.30 Billion

DJ3474d ago

There was nothing said about Microsoft as a whole, simply that their Entertainment Division has suffered a 1.89 Billion debt this quarter. Divisions are autonomous companies within a corporation (Microsoft in this case), and the Entertainment Division is in danger of losing support from its investors.

Vash_The_Stampede3474d ago (Edited 3474d ago )

ktchong claims to be an adult and is talking about just throwing the figures out there, but he made a huge mistake of getting the figures of Microsoft as a whole and forgetting that the article is only talking about the Game Division. Microsoft is a powerful and strong company, I agree with that. It's just the gaming division that is taking the huge blow right now, money wise. CEO's are never happy when a single division loses that money, so stop coming in here trying to talk on behalf of microsoft.

@ The crying kid ktchong below:

Wow great comeback, especially after being proving to be an ass who has no time on his hand, doesn't get laid, and his console is in the shop so he has nothing but time to look up financial reports. Seriously man get a life. I'm out for the night.....peace! :)

the_round_peg3474d ago (Edited 3474d ago )

Shadow Flare claimed that Microsoft is "$1.89 Billion in debt!" I was responding to THAT particular statement made by Shadow Flare, which is just completely WRONG.

I'm just using FACTS and NUMBERS from VERIFIABLE SOURCES to point out that Shadow Flare is the misinformed (or uninformed). *Microsoft does not have debt.* That is the FACT. The financial statement shows it. The information is out there. Why don't you just go look them up?

http://finance.yahoo.com/q/...

That's the financial statement for Microsoft. Go down to the line that says "Total Debt"... it reads ZERO. It can't get any clearer than that.

That's not even my opinion here. I'm just using FACTS available from Yahoo Finance, and they are straightfoward figures.

Who's the moron? I say the idiots who can't even read financial statements. Come back and talk after you learn how to balance your bank statements and manage your investment portfolio, if you even have your own bank statements and a portfolio.

Like a shadow I am3474d ago (Edited 3474d ago )

Adults are supposed to care about finance and stocks and investments.

Are you just an ignorant little kid, and you are clueless about what adults do?

Or are you an adult who's uneducated, too poor and too broke to have any money to invest in the stock market?

Or are you an adult who's too dumb and stupid to set aside money and invest for your retirement?

So, which one are you, Vash? How old are you anyway?

Mrs. Chong does not have to show that he's an adult. By looking up and comparing financial reports, he has already show that he's an adult. That's what responsible adults do. It's Vash who shows that he's a spoiled little brat who knows nothing.

Marceles3474d ago

Stick to the article...the game division lost Microsoft 1.89 billion. You can give your "at least their other divisions are doing well" cases all you want, but we're talking about the game division. This argument is almost like looking at stand alone hd-dvd selling well without realizing that blu-ray is still way ahead.

bung tickler3474d ago

@ktchong + bubble for you sir. the rest dj, shadow ect... are on ignore...

+ Show (4) more repliesLast reply 3474d ago
Lightning Mr Bubbles3474d ago

The article where they say MS made money this quarter and XBOX 360 fanboys are already jumping up and down.

tomfoolery3473d ago

YOU LITTLE SONY DIPS JUST GOT SMOKED!
BY THE WAY,GET YOUR PUNK ASSES BACK TO THE SONY EXPLODING BATTERY SIDE.

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