Microsoft's entertainment division shipped 1.2 million Xbox 360s in the quarter, and posted a huge $130 million loss on $1.2 billion in revenue.

The operating result for the entertainment division was a loss of $130 million on revenue of $1.19 billion, compared to a loss of $171 million on revenue of $1.59 billion in Q4 2008.

For Microsoft as a whole, revenue dropped 17% and operating profit dropped 30%. Those are very bad numbers for Microsoft.

Can Microsoft lower the price of the 360 again if it already looses so much money now ?

If not, what can MS do when Sony cuts the PS3 price ?

Will MS have to close even more studios ?

Do you think it means the 360 is in trouble ?

http://news.vgchartz.com/news.php?id=4487



Update : MSFT share is losing 7% in after hours market right now, confirming those numbers are indeed bad.

Already posted in news and the Microsoft forum.

Did they release their sales expectations for the next year? It would tell us their pricing strategy and whether there will be a price cut or not.

@dolemit3 : Here is the complete report :

http://www.itnewsonline.com/showprnstory.php?storyid=56778

I didn't find any console sales expectations, so I don't know.

The stock will be down tomorrow due to the profit drop in their software division. The xbox division is just a distraction now that it no longer loses billions, nor makes much for the company.

Thats pocket change for MS, although it might affect any potential price cut.

what this guy said.

To add, they don't have to worry about sony's price cuts either because I'm fairly sure sony lost more money than them.

$130 million is not huge by any means. People were trying to downplay Sony's gaming division losing $350 million last quarter and now $130 million is huge?
Not that it's a good thing but it's really a drop in the bucket to Microsoft, we'll probably see a bigger loss from Sony.

MSFT stock is already down sharply actually (7%) in after hours market. Analysts are slaughtering it.

But yes, the xbox 360 is a minor business for MS, they could stop it any day if they need money.

The problem they have is their core business doesn't work well anymore either.

- Windows Vista failed and people don't want to 'upgrade' to Windows 7 either... The PC market is in deep recession, it doesn't help.
- Office looses market share to Open Office (even my state owned company replaced Office by Open Office...)
- Zune is losing to Ipod
- Internet Explorer is killed by Firefox and Safari month after month.
- On the net, Google completely destroys MS.

All in all, MS looks more and more like a fallen giant. It's now clearly heading south.

^ MS are a fallen giant with monopolies in the browser and OS markets?