Microsoft Q4 Profits Climb 7 Percent, Despite Xbox 360 Repairs

Microsoft has released its fourth quarter results, managing net profits of $3.04 billion for the period despite having incurred a $1.06 billion charge to repair Xbox 360 consoles following the company’s highly publicized three year warranty extension - while simultaneously raising its forecasts for the full year. The reported profits were up 7 percent over last year’s $2.83 billion for the same period, while Microsoft’s revenue climbed 13 percent to $13.4 billion, narrowly beating analyst projections of $13.27 billion, according to Reuters. Meanwhile, the Xbox 360-containing EDD division saw declining revenue due to lowering Xbox 360 console sales, though this was somewhat offset by increased video game and Xbox 360 accessory sales, as well as sales of Microsoft’s Zune media player. According to Microsoft, the company shipped just 0.7 million Xbox 360 consoles during quarter, compared to 1.8 million a year ago. Altogether the division posted revenue of $1.16 billion for the quarter, but recorded a loss of $1.20 billion. The division’s increasing operating loss was blamed primarily on the aforementioned $1.06 billion Xbox 360 repair charge, though the company notes this was partially offset by decreased Xbox 360 console manufacturing costs. Xbox and PC game revenue was also down a considerable $265 million or 28 percent from the prior year, while revenue for consumer hardware, software, TVs, and mobile devices showed marked increases over the previous year. Looking ahead, Microsoft increased its fiscal 2008 projected revenue to between $56.8 and $57.8 billion, up slightly from the previous forecast of $56.5 to $57.5 billion, citing continued demand for its recently launched Windows Vista operating system, as well as its line of home office and business software products.