MS earnings reports released

Fastest annual revenue growth since 1999 fuels 32% increase in earnings per share.

REDMOND, Wash., July 17 /PRNewswire-FirstCall/ -- Microsoft Corp. today announced revenue of $15.84 billion for the fiscal fourth quarter ended June 30, 2008, an 18% increase over the same period of the prior year. Operating income and diluted earnings per share for the quarter were $5.68 billion and $0.46, representing growth of 42% and 48%, respectively, over the same period of the prior year.

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Information about Entertainment Division

Entertainment and Devices Division

Three Months Twelve Months
(In millions, Ended June 30, Percentage Ended June 30, Percentage
except percentages) 2008 2007 Change 2008 2007 Change Revenue $1,575 $1,153 37% $8,140 $6,069 34%
Operating income
(loss) $(188)$(1,223) 85% $426 $(1,969) * Not Meaningful

Entertainment and Devices Division ("EDD") products include the Xbox 360 platform (which includes the Microsoft Xbox video game console system, Xbox 360 video games, Xbox Live, and Xbox 360 accessories), the Zune digital music and entertainment platform, PC software games, online games and services, Mediaroom (our Internet protocol television software), the Surface computing platform, mobile and embedded device platforms, and other devices. EDD leads the development efforts for our line of consumer software and hardware products including application software for Macintosh computers and Microsoft PC hardware products, and is responsible for all retail sales and marketing for Microsoft Office and the Windows operating systems. In April 2008, we acquired Danger, Inc. ("Danger") a software-as-a-service company that provides mobile operators with an integrated end-to-end solution to deliver mobile data and Internet services to their subscribers.

Fourth Quarter

EDD revenue increased primarily due to increased Xbox 360 platform sales. Xbox 360 platform and PC games revenue increased $234 million or 35%, primarily as a result of increased Xbox 360 console sales, Xbox 360 video game sales, and Xbox Live revenue. We shipped 1.3 million Xbox 360 consoles during the fourth quarter of fiscal year 2008, compared with 0.7 million Xbox 360 consoles in the fourth quarter of fiscal year 2007.

EDD operating loss decreased primarily due to decreased cost of revenue and increased revenue, partially offset by increased research and development expenses and sales and marketing expenses. Cost of revenue decreased $826 million or 49%, reflecting the $1.1 billion charge in the fourth quarter of fiscal year 2007 related to the expansion of our Xbox 360 warranty coverage, partially offset by increased Xbox 360 product costs related to increased unit console sales. Research and development expenses increased $141 million or 38%, primarily reflecting increased headcount-related expenses, increased product development costs, and costs relating to Danger, including a $24 million in-process research and development expense. Sales and marketing expense increased $63 million or 22%, reflecting an increase in marketing and advertising campaigns and an increase in headcount-related expenses associated with product marketing and the retail account sales force. Headcount-related costs increased 24%, driven by an increase in headcount during the year.

Full Fiscal Year

EDD revenue increased primarily due to increased Xbox 360 platform sales. Xbox 360 platform and PC game revenue increased $1.7 billion or 41% as a result of increased Xbox 360 console sales, video game sales led by Halo 3, Xbox Live revenue, and Xbox 360 accessory sales. We shipped 8.7 million Xbox 360 consoles during fiscal year 2008, compared with 6.6 million consoles during fiscal year 2007.

EDD operating income increased primarily due to increased revenue and decreased cost of revenue, partially offset by increased research and development expenses and sales and marketing expenses. Cost of revenue decreased $683 million or 13%, reflecting the $1.1 billion Xbox 360 warranty charge in fiscal year 2007 described above, partially offset by increased Xbox 360 product costs related to increased unit console sales. Research and development expenses increased $242 million or 18%, primarily reflecting increased headcount-related expenses and costs relating to Danger, including a $24 million in-process research and development expense. Sales and marketing expenses increased $93 million or 8%, primarily reflecting increased headcount-related expenses and increased bad debt expense. Headcount-related costs increased 21%, driven by an increase in headcount during the year.

So how much did they gain, or lose?

The Entertainment division lost 188 Million $ during the quarter but overall made 426 Million$ over the full year.

This was the first quarter were the Others price cut had an effect ( it was done 2 weeks before the end of the previous quarter).

Still not so good considering this was a rather strong software quarter with GTA4....


I will admit I wasn't expecting a loss after the previous 2 quarters...

?

A loss?

It looks like they had a lot of increased expenses due to research, increased payroll, and from acquisitions.

Wow...microsoft as a whole is a monster though. They really don't need the xbox at all...

They also increased R&D costs as well as Sales & Marketing costs considerably in the last quarter (over $200Million).

R&D increased $242 million in 2008 compared to 2007 and $141 million was this past quarter. Sales & Marketing costs increased $92 million in 2008 and $63 million was this past quarter.

How much they sold xbox360?

gotta love grammar