Microsoft Profits Up As Halo 3 Revenues Hit

Tech giant Microsoft has announced revenue of $13.76 billion for the quarter which ended September 30, 2007 -- a 27% increase over the same period last year. Profits were up to $4.29 billion from $3.48 billion in 2006. The revenue of the Entertainment and Devices Division, under which the Xbox 360 (as well as the Zune and Windows Mobile) falls, increased 91% to $1.92 billion. According to Microsoft, PC and console game revenue in the quarter increased $895 million, or 148%, with some of the huge gains driven by Halo 3, which contributed around $330 million of revenue in that timeframe. However, hardware also helped the company's revenues, as Microsoft shipped 1.8 million Xbox 360 units in the quarter, compared to 0.9 million in the same quarter last year. This led to a profit for the division of $165 million, compared to a $142 million loss last year. Microsoft did blame the Xbox 360 for increased costs, however -- noting that there was a 99% increase in cost in revenue, or $584 million, primarily related to sales of the console, inventory write-downs and most notably the warranty costs brought on by the console's technical issues. In addition, sales and marketing expenses increased $49 million or 23% primarily related to Xbox 360, including Halo 3, and Zune. "This fiscal year is off to an outstanding start with the fastest revenue growth of any first quarter since 1999," said Chris Liddell, chief financial officer at Microsoft. "Operating income growth of over 30% also reflects our ability to translate revenue into profits while making strategic investments for the future."