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Microsoft's Xbox losses almost double

Microsoft's Xbox losses almost double

Losses at Microsoft's Home and Entertainment segment, which includes the Xbox game console, nearly doubled in the last three months of 2002.

The segment, that also includes Microsoft's TV platform and PC games, posted a quarterly operating loss of $US348 million compared with $US180 million for the same period a year ago, the company said in its second fiscal quarter report filed with the US Securities and Exchange Commission (SEC).

The loss grew as the Xbox became available around the world. This drove up segment revenue from $US833 million to $US1.28 billion.

In the video game console industry vendors typically lose money on each console they sell, but try to earn that back when selling games, accessories and services.

Microsoft announced its second quarter results on January 16, but did not detail operating profit and loss per segment.

While Home and Entertainment recorded the largest operating loss of any segment, Microsoft Business Solutions, which includes Great Plains, bCentral and Navision, reported the largest jump in operating loss, from $US41 million in the final three months of 2001 to $US93 million in 2002. Microsoft acquired Navision last year.

Four of Microsoft's seven company segments posted an operating loss in the last months of 2002. The MSN Internet group, which offers Internet access and online services, and CE/Mobility (handheld computing software), completed the list of loss-making company parts.

The Client segment - the Windows operating system part of Microsoft - again generated the most profit for the company: $US1.97 billion in operating income on revenue of $US2.44 billion in the December quarter of 2002. This was down from income of $US2.11 billion and revenue of $US2.68 billion for the same period in 2001.

The Information Worker segment, that includes the Office products, was the second most profitable. Operating profit rose to $US1.88 billion on $US2.41 billion in revenue, up from $US1.74 billion income and $US2.2 billion in revenue a year earlier.

Operating profit at the Server Platforms part of Microsoft also increased in the last quarter of 2002 to $US498 million from $US402 million a year ago. Revenue was up from $US1.44 billion to $US1.67 billion.

Microsoft also disclosed that it paid $US200 million for PlaceWare, a privately held company that provides Web conferencing services for businesses. Financial terms were not disclosed when the deal was announced last month.


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