As a company, revenue was down slightly, year-over-year, while earnings were up slightly.

31m is a drop in the bucket considering their overall earnings were $4.4b for the quarter, but it would be nice if the entertainment division were in the black. My guess is MS was willing to bleed a bit of red in that division in order to halt any slide in market share to Sony.

Net income was down as well from $4.39b to $2.98b.

Thats not the issue, it puts into doubt the sustainability of the 360.

as i said before: R&D ZUNE HD.

I doub that seeing how it's most likely profitable. Like someone said it's probably zune HD r&d

ROFLOL...nearly EVERY company is reporting decreased sales, revenue, and profits...and people are behaving like M$ should be immune to it...Heck, Toyota is reporting losses...freaking Toyota...we are in a reccession, bordering on depression. M$ is in a really strong position, since nearly $3 bln in profits is alot of cheddar, and they are going to be in a primo position to do some acquisitions in the coming year. I'll wait for the detailed 10-Q to see how they spent money during the quarter, before doing to chicken little...since one-time charges spent on R&D is hardly a troubling event.

Wwait.... Loss??? So.... I'm guessing it was that price cut??

well every company is reporting losses right now so im sure M$ is no different. But the 360 s very sustainable and im sure is profitable + M$ lost 4 Billion on the origional xbox and now that theyve accomplished so much i doubt they will just throw in the towel because they lost an additional 31M.

Maybe it was because they paid some $$$ for some games that are yet to be announced?

31 million isn't a lot for MS but is of concern considering how many units they are selling. My only guess is the Zune HD is swallowing a lot of cash.