Microsoft Reports Fourth-Quarter Results

Microsoft Corp. today announced revenue of $13.10 billion for the fourth quarter ended June 30, 2009, a 17% decline from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $3.99 billion, $3.05 billion and $0.34 per share, which represented declines of 30%, 29% and 26%, respectively, when compared with the prior year period.

The fourth-quarter financial results also included $193 million of legal charges, $108 million of impairments to investments and $40 million of additional severance charges related to the previously announced plan. Operating expenses were reduced by $105 million of capitalized research and development expenses due to the technical milestones reached for Windows 7. Combined, these items also reduced earnings per share by $0.02.

[shocky16]

inb4 "haha MS is losing money, it makes me happy!"

[Nineball2112]

Actually, they were profitable, just less so than a year ago.

I'd think any sane person would say that this was to be expected.

It's a pretty big drop off, but in this economy, I'd say they did about as well as they could. *shrug*

However... $193 Million for legal charges? Was that from judgements against them or is that the fees paid to their internal/external lawyers?

[mynd]

Entertainment and Devices made 7.7bn in revenue down 500 million from last year.
Xbox360 sold 11.2 million up from 8.7 million.

I woudlnt say that was a bad result.

[Cenobia]

Actually, you just can't read. Shocky was defending MS if anything.

Anyway, I don't understand why anyone would care one way or another. It's not my money, and they're doing well enough to keep the 360 going.

[mint royale]

no doubt Morganfell will disagree and claim this proves MS's imminent doom. Gotta love it!

@green - Ah yes forgot him, although a Sony fanboy he is much less delusional than Morganfell.

On topic decent results for MS but not spectacular by any means. Sales slightly down this quarter compared with Apr - Jun 08. 31.4 million lifetime shipped consoles is a decent amount and they sure are pulling away from the original box with speed.

[green]

I am sure you mean Sony's resident CFO on N4G, AKA Darkrider66.

[evrfighter]

I would imagine a large portion of the legal fees were done in part by the European Union's demands of making M$ install other browsers in their OS's. They were goin at it for a good amount of the year.

[sorceror171]

@Mynd - Microsoft's entertainment division posted an operating loss, though. $130 million worth, on $1.2 billion in revenue. ( http://news.vgchartz.com/ne... I know the entertainment division has had one profitable quarter a few years ago, but I'm not sure it's ever made a profit since.

Sony and Nintendo aren't willing to sell an entire generation or two of consoles at a loss. Microsoft apparently is.

[mint royale]

really? Nintendo, yes as games is all they do and thus they have only made a quarterly loss once.

However Sony and MS are more than willing. MS was willing to put the xbox out at a loss to halt Sony's move into the living room and as a result have made around a $10 billion on the xbox division.

Sony are similar. Looking at SOny's financials they have lost HUGE amounts on the ps3 which has negated their ps2 and ps1 profits. I posted the numbers a while ago and I don't have time to dig them out but the figures for both companies game divisions are not pretty unfortunately.

[IdleLeeSiuLung]

Yeah, but for the year 2009 it was a total profit of $169 million for Entertainment and Device Division (which includes a lot more than just the Xbox Division). They lost almost as much in one quarter as they gained in the whole year though....

[gaffyh]

As expected, everything is down due to the recession. But just thought I'd mention this bit:

"Xbox 360 platform and PC game revenue decreased $110 million
or 12%, primarily as a result of decreased Xbox 360 console sales and decreased revenue per Xbox 360 console due to price reductions during the past 12 months, partially offset by increased Xbox Live revenue."

So MS is losing money (most likely on each 360 sold) due to their pricecut last year, which means they cannot afford to do another pricecut which many people have speculated. And they are actually make more money from XBL subscriptions and online transactions, which is good.

"We shipped 1.2 million Xbox 360 consoles during the fourth quarter of fiscal year 2009, compared with 1.3 million Xbox 360 consoles during the fourth quarter of fiscal year 2008. Foreign currency exchange rates accounted for a $27 million or two percentage point decrease in revenue."

^With regards to this I'd like to point out that VGChartz is showing this as 1.6 million units in the same quarter.

[mynd]

@sorceror- Eh?
They lost 130 million for the quarter. Yes thats true, but this is the slow 1/4 if anything.
As for profits. Entertainment made $160 million profit for the year.
Down from $497 million the year before.
Wait, doesnt that mean they made 2 years of profits in the entertianment division?
Why yes, yes it does.

LOL at disagree. How the hell can you disagree with figures?

And for good measure for the doubters.
http://news.teamxbox.com/xb...

[HolyOrangeCows]

@1

Bu....bu...but going through a bad time means that the company is ''d00000med!'', right?

[indysurfn]

If your too unintelligent read a financial report you should not comment on it. Microsoft made 3.99 BILLION DOLLARS the this last quarter, not lost. Reading AND comprehesion. Why is it that the fans from Sony (which really IS losing money try to say Microsoft is losing). Even the games division made money for the second straight full year so. READ people READ. I hate hipocretes.

[IdleLeeSiuLung]

Based on your quote and statement, there is nothing indicating a loss on each 360 unit sold. A decrease in revenue doesn't mean a decrease in profit let alone a decrease in profit per unit sold. Even worse is when the revenue includes multiple sources of sale for both PC and 360.

[sorceror171]

@mynd - Thanks for the correction; it's been a while since I followed Microsoft's numbers. Interesting to hear ESD's actually managed to become profitable. Looks like they're only willing to sell one generation at a loss. :->

[Fishy Fingers]

This is just copy and paste of the official MS page. http://www.microsoft.com/ms...

Disagrees? Ha... only n4g.

[lloyd_wonder]

"Microsoft Entertainment Posts $130 million Loss in Q4 2009"

http://www.n4g.com/industry...

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

How do you lose money on billion dollar revenues? Lol. They must be making sh!t from those 360's sold.

[Fishy Fingers]

Entertainment divisions (like any other) have quite a few more over heads than just manufacturing costs. Staff wages, utilities, R&D etc etc etc etc

[Alcon Caper]

Econ. 101

[BLaZiN PRopHeT]

Entertainment and Devices Division (“EDD”) offerings include the Xbox 360 platform (which includes the Microsoft Xbox 360 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 Apple’s Macintosh computers and Microsoft PC hardware products, and is responsible for all retail sales and marketing for Microsoft Office and the Windows operating systems.

Moron

[GiantEnemyCrab]

"Moron"

QFT!

[Gamer_Politics]

Sony fans just dont understand simple things....

[El Botto]

Every shiat60 ARCADE sold (price dropped to 199) is sold at a major LOSS. Thats why.

From the statement: "Revenue from our Entertainment and Devices Division decreased across most lines of business including Xbox 360 platform and PC game revenue which declined primarily as a result of decreased console sales and revenue per console due to price reductions during the past 12 months, partially offset by increased Xbox Live revenue."

Lol massive PWNED. Price reductions to make it appear as if it is staying ahead of the PS3. Economic reality is that PS3 was beating the shiat out of the 360.

I stated before that MS cut their margins by lowering the price. Today, my statement has been proven. For those who dont understand simple economics, I will explain in simple English:

EVERY 360 SOLD (more so for the 199 models) is sold at MAJOR LOSS. MS managed to get higher console sales (thanks 199!) but in return their losses get HIGHER (thanks 199 haha!!).

Another way of saying this, is:
360 was fked without pricedrop last year. 360 is still fked with pricedrop.

Haha.

@darth
I wish. But companies like MS dont break down these things for us. They keep it to themselves.

"Which one did you support?" --- I dont support crap

@the other noob below me
Haha you wish. Sony's PS3 is doing better than ever. And it doesnt take a rocket scientist to see that the only thing standing in the way of PS3 dominance, is the price.

[Gamer_Politics]

and sony is killing them selfs with the ps3 without any price cuts...they cant even afford to have ads played on tv

[darthv72]

Do you have the fiscal earnings report that shows the percentage of gains/losses per sku?

I'd be interested to see the results on the arcade, pro and elite as they relate to the whole.

Also, can you post your graph on the popularity of the different sku's with the corresponding price per unit gain/loss?

edit: so....the generalization you make about the loss per arcade sku being the contributing factor in this case is an....assumption?

I can assume like you and say that the majority of sku's sold are the pro. I do not know the profit margin the pro or elite sku's bring in per unit but I am sure it is enough to cover the "major loss" you claim each arcade sku creates.

[Once Upon a Fable]

lol this is funny.

[Mo0eY]

Entertainment and Devices Division ...Xbox 360 platform ... Xbox 360 video games, Xbox Live, and Xbox 360 accessories...the Zune digital music and entertainment platform...

All the things above are flops (Zune) or failures (specially those RRoD/E74/Scratching discs 360s, Xbox Live's subscription plan where you view ads, and all of those accessories they made you zombies pay for, lololol).

Had they not screwed you guys out of money, they'd have a much greater loss. :D

[Anon1974]

There was a great article that looked at 360 sales, and how the price cut effect seems to be wearing off based on this latest data.
No way the 360 mafia would let that pass though. They failed it in a heartbeat, claiming it was a dupe of the MS fiscal report. Judge for yourself.

http://www.smgamers.com/?p=...

If this article is the same thing as MS reporting their fiscal year end, I'll eat my hat. Just look at the crew that doesn't want you to view that article.

http://www.n4g.com/NewsPend...
and despite being approved a second time they killed it again.
http://www.n4g.com/NewsPend...

I think some around here need to have their approval privileges removed as they obviously didn't read the article. I encourage everyone sick of 360 fans dictating what gets posted to let the mods know here... http://forums.n4g.com/tm.as...

There's a post at the bottom asking to have this news article reinstated.

[mynd]

@darkride, maybe it's because its just conjecture, the writer doesnt really kniow why the sales were worse (by a "shock" 100k) than last year.

If your prepared for Sony to come out on the 30th and announce less than 1.2 million sold, and you prepared for exactly the same artcile written not about Sonys price cut, but about the popularity of the PS3 in general, then go for it. But most aorund can see this article for what it was, just somebody trying to stir before Sony's fiscals are released.
When Sony come out with more than 1.2 million sold for this 1/4, maybe we can all say look the 360 is failing.

[Anon1974]

The killed article in questions was about the 360's price cut wearing off. Sony's got their own problems.

The point was, the article looked at the spike the 360's had since the price cut that is now wearing off and commented on it. Prior to the price cut the 360 was having a rough go compared to the PS3, and that's examined in the article.

Besides, it's not a problem with the article, it's a problem with the members who lied in order to keep the article from you. Clearly it's not the same thing as this Microsoft Fiscal update. Report it Lame if you so choose, but don't lie that it's a duplicate when it's not.

Personally, considering Microsoft boasting about NPD numbers, I think it's telling that the 360 had it's worst quarter in 2 years and 360 fans on this site are too afraid to face what that could mean. PR and reality are two entirely different things. How can you boast sales are up 22% in the first 5 months in one region, when in reality worldwide sales haven't been this bad in years? Clearly it's designed to distract from the bigger picture which we only see when financial updates come out.

[mynd]

One 1/4 of slaes that are down by 100k does not show any "spike" waering off.
If all the consoles are down in shipments, and the 360 is actually the least affected, then what would you say?

You cant go saying, oh oh look sales effect has worn off, when you have nothing to compare it to.

it could well be that all the consoles are down by 20% and the 360 is only down by 8%.

Then who looks stupid?

Thats what it has to do with Sony (and Nintendo), and that why an article like that is just conjecture untill we see how everybody else has done.

If the article simply said..."signs point to the economy having an affect", or "despite price cut, sales have slowed this 1/4" And then maybne given some decent reasoning, then it might be news worthy.
But to say "oh look spike over" is just stupid.
We all know the economy is worse ocndition, nobody is expecting anybody to be selling more than they did this time last year. But down by 8%? It's only relative when you compare it to the others sales.

[mrv321]

I couldn't help but laugh at this

claims that Microsoft has infringed the intellectual property rights of others;

And then later on

adverse results in legal disputes;

[GiantEnemyCrab]

first troll.. you kind of screwed up..

This troll didn't get much response..

Keep trying..

[swiftshot93]

This damn recession is ruining everything. On the bright side its seems that we are in the beginning of a recovery stage. Well, at least according to to those "analysts" on T.V. :/

[Sir Ken_Kutaragi]

...'Project Natal/Milo/LOOK MOMMY i can Drive without a steering-wheel while eating my Big Mac MOMMY' will save them next year!!! ;-D

[lloyd_wonder]

Poor M$. Selling their 360s for nothing to compete with Sony.

Poor M$

[Gamer_Politics]

poor sony still taking major loses on that blu-ray player and cant afford no price drop or even tv ads

[TheTruth89]

Poor funny g@y owner of a "DVD Capable 360°C Mini-Furnace".

[Gamer_Politics]

Awww poor owner of a blu-ray player that 3rd party devs dont take serious....

[El Botto]

And Transformers 2 and Rise of the Cobra while you live in denial land thinking that 3rd party is not supporting Blu Ray.

Edit below: than you wont be needing movie downloads service. I think Ill give MS support a call tomorrow and tell them that 360 fans dont want to watch any movies on the shiat60. If they scratch that service, they save a few bucks haha.

[Gamer_Politics]

thats right use that machine to watch movies like everyother ps3 owner does because its not good for gaming

[Tinted Eyes]

really becuase i know the ps3 has great games and doesnt blow up when you play it

[Gamer_Politics]

but who is buying games?i doubt owners of that machine even notice that it plays anything besides blu-ray movies since thats what its mainly used for...

Edit;@below...i dont hate anyone

[thebudgetgamer]

do you really hate every ps3 owner?

edit: fair enough and for the record in about a year i have twenty disck games and about 16 psn games.
please dont lump me in with the idiot fanboys no matter what consoles they back.

:)

[voodoo341]

"Revenue from our Entertainment and Devices Division decreased across most lines of business including Xbox 360 platform and PC game revenue which declined primarily as a result of decreased console sales and revenue per console due to price reductions during the past 12 months, partially offset by increased Xbox Live revenue."

I wonder do Microsoft regret cutting the price of the 360 so drastically.

[mynd]

I doubt it, they increased 360 sales, and still made a entertaiment division profit for the entire year.
If you compare to this time last year, they didnt even loose as much money.
Given the tough economy, I think they did more than OK.

[ultimolu]

Well...that's not good.

[Captain Tuttle]

They aren't the most efficient company in the world. Some analysts are really bullish on their stock, heck, the whole tech sector is taking off.

Edit: Interesting...it cost them 276 million for the Windows 7 upgrade thing they did.

[El Botto]

My friend, this is the silence before the storm. It is showing that every tech company is making money even in tough times but MSs profit is tumbling even though they had a monopoly on windows.

This is without any doubt the clear sign that MS is in a downward spiral. Enjoy the last years while you still can. When MS loses its monopoly (Googles OS), they are done for.

[SpoonyRedMage]

Well do you count Sony as a tech company because they've being posting overall losses...

[Captain Tuttle]

If you consider net income of $14.57 billion in the middle of the biggest economic downturn since the Great Depression a "downward spiral" your expectations of business performance are a bit...off.

[BLaZiN PRopHeT]

They sold more 360's this fiscal year than last, and they lost less money this quarter than the did the same quarter last year.

Over all they are making a profit for this year.

11.1 million 360s shipped in FY09 compared to 8.7 million shipped in FY08.

Entertainment and Devices Division
Operating Income (Loss)
FY09 4Q: (130)
FY08 4Q: (171)

FY09: 169
FY08: 497

[green]

Considering the state of the economy at the moment, those are not bad figures at all.And if XBL keeps growing and sales stay healthy as they are at the moment, then i expect them to post even better figure next year.

[Once Upon a Fable]

They would have sold even more 360's for Fiscal 2009 if we weren't in a Recession....people aren't buying as much.

[commodore64]

Yeah, it's a tremendous result for the MS and the EADD.

Not only has MS weathered the storm of the recession, but they have also posted $169 million profit for the year in the EADD despite the massive pricecuts of the 360 skus.

All things considered, MS must be very happy with the result.

I shudder to think what sort of numbers Sony is going to post, given the high cost of the ps3 hardware. Currently, Sony is still losing money on every ps3 sold and suffering losses in other departments too. With an impending ps3 pricecut, this situation will undoubtedly get much worse.

The question is, will Sony be able to create the much-needed miraculous PS3 turnaround in the next 3 years?
I have to be honest and say it seems exceedingly unlikely.

What do others think?

[cmrbe]

This is the downside for going for marketshare by doing that price drop last year.

This proves what i have been saying all along.

Now what do you guys think MS shareholders think about this?.

Edit: Blaze, i a referiing to MS entertainment division which according to this article posted a loss of 130 million. The revenue would have been much higher if they didn't cut the x360 price by $100 per unit since last year. What is even worse for MS is their shippment figures is higher compare to the previous year but they are still loosing money. MS shareholders must be concerned about the Entertainment division.

[BLaZiN PRopHeT]

They made a profit of 169 million for the year. I dont think the share holders are very upset. And the company made over 13 billion for the year.

[sack_boi]

Actually, last year, at a higher price point, they lost more money than the did this year, with a lower price point.

Which means going for market share was a good thing after all.
What they lose with the hardware, they earn it back with the software and XBL.

[BLaZiN PRopHeT]

You should scroll up and read my other post. You will see how your wrong.

Entertainment and Devices Division
Operating Income (Loss)
FY09 4Q: (130)
FY08 4Q: (171)

FY09: 169
FY08: 497

they lost less money this quarter than the same quarter last year. They also have more R&D this year than last year. Natal, Window's mobile, and Zune HD ect

[commodore64]

@ Blazing Prophet.

Gotta say, it's nice to see that you have done your homework.
Your posts are very good.

[cmrbe]

in here that you are in the Open aka Fun Zone.

Oh and x360 suck!.

[darthv72]

Well I am stuck here for two days so this has to be my place to be serious. Even if there are those who do not.

Go figure I make a good comment in another thread and because of a single word it gets me banned. It wasnt even an offensive comment but one of simple question.

oh and.....I got nothing.

Shame I cant make fun of any that I dont have cause I got em all.

[Shadow Man]

DOTON!!! Kage non Jutsu!!! *SHSHSHSHSHSSH!!*

[Kaneda]

Apple stock is great! :) maybe buying M$ stock soon great time to buy!

[Gamer_Politics]

MS game division is in the black thats good news..now i guess MS can find some more exclusive titles to buy away

[sack_boi]

b!tch more please, I love it when you do.

[OtherWhiteMeat]

Hopefully Haze or Lair.

[cmrbe]

There is no report of any gaming division being profitiable.

However there is some info on x360 and PC specifically for 3 months ending June.

"Xbox 360 platform and PC game revenue decreased $110 million
or 12%, primarily as a result of decreased Xbox 360 console sales and decreased
revenue per Xbox 360 console due to price reductions during the past 12 months"

What i found weird is that according to this report they shipped few x360 this period compare to previous year of 1.2m compare 1.3m.

[yorkie]

Did anyone actually read all that ?

[xaviertooth]

ohhhhhhhh, that will hurt BIGTIME!

now let's see the bots spin doctors! what's NPD btw? lol!!

[kewlkat007]

New XBL features, Natal, ZuneHD, Touch Table, and Windows 7 seems tight. All stuff that have yet to be release. I'm glad the fire has been lit under their asses..to do/offer more.

I expect every company to do less, some more than others obviously. Jobs are still being lost and more people are saving.(which doesn't help the economy)

Getting ready for the holiday push in 3 months is crucial.

[divideby0]

conversly IBM posted great score card, stock soars toward higher year end earning forcast...keep buying those game consoles with IBM chips

[pure pwnage24]

I wonder if that picture is a tombstone from the future at the end of this gen

[SixAmpFuze]

it states that in the decrease is money paid to like 12k laid off workers and a ton in legal fees and that they still made a profit so ms has nothing to worry about