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Microsoft Game Division Increases Losses in Q4, But Boosts Annual Profits

Despite a strong year, Microsoft's Entertainment and Devices Division increased Q4 losses from $141 million to $172 million year-over-year, as it shipped 1.5 million Xbox 360 consoles in the three months from April to May.
Microsoft's Entertainment and Devices Division, which includes its Xbox 360 and PC game groups, increases its losses in the fourth fiscal quarter from $141 million to $172 million year-over-year, but for the fiscal year as a whole, the division saw a huge year-over-year improvement, from $108 million in profits to $679 million. In its latest financial statement, Microsoft also said it shipped 1.5 million Xbox 360 consoles in the quarter that ended June 30, 2010, a 25 percent increase over the 1.2 million units it shipped in the same quarter last year. The shipment for the last 12 months, however, decreased from 11.2 million units to 10.3 units, a drop of 8 percent over the previous year. The quarterly losses are down to "increased operating expenses," according to Microsoft, with a significant uptick in Xbox 360-related marketing and development. Revenue got a big bump from $1.3 billion to $1.6 billion, thanks to Xbox 360 platform and PC game sales, but it wasn't enough to counteract the greater spending. For the year, Entertainment and Devices revenue remained flat at about $8 billion, but income skyrocketed. In contrast to the fourth quarter, that's down to the reduced expenses that come with lowering Xbox 360 console production costs. The broader Microsoft corporation had an extremely strong quarter, beating its own expectations. Revenue was up 22 percent year-over-year to $16 billion, and profits were up a massive 48 percent to $4.5 billion, largely thanks to strong performance by products like Office and Windows 7. For the year, revenue was up a more modest 7 percent to $62 billion, and profits were up 29 percent to nearly $19 billion. "We saw strong sales execution across all of our businesses, particularly in the enterprise with Windows 7 and Office 2010," said COO Kevin Turner in a statement. "Our transition to cloud services is well underway with offerings like Windows Azure and our Business Productivity Online Services, and we look forward to continuing our product momentum this fall with the upcoming launches of Windows Phone 7 and Xbox Kinect."

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