The losses Microsoft incurred during the second quarter of the fiscal year had nothing to do with sales or lacking demand of their products in the entertainment division. Instead, the losses have stemmed from a rather unfashionable rise in Xbox 360 console replacements and repairs.

Any gamer who has been keeping track of the constant claim of 360's shutting down, burning up and crashing, you’d have to wonder how well that fairs for Microsoft’s profits. Well, it doesn’t fair well for their profits. That’s why they lost millions of dollars in expenses for replacements and repairs for the Xbox 360.

But it’s not all stormy weather and blue velvet forecasts for M$. According to Gameindustry.biz, “Despite the US $289 million loss, the Entertainment Devices division was responsible for US $2.63 billion (EUR 2.03) profit during the second quarter.” So while there were loses, Microsoft still pulled out on top with some pretty big profits.

Microsoft even posted a $1.3 billion increase in profits for the first quarter and a $1 billion increase in profits for the second quarter. But despite these profitably acceptable numbers, Microsoft is cutting back the production of Xbox 360 units. The scheduled 15 million production estimates for 2007 will be cut down to 12 million units for fiscal 2007. But maybe Microsoft is also getting a little wet behind the ears with the super-success of the Wii and the possible super-star rise of the PS3 for 2007. Cutting back on production units just might save the company on producing dust collectors; because what’s worse than having 3 million units sitting on the shelf next to an empty space where the Wii used to be?

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