Xbox shortage dings Microsoft sales

  • By Ina Fried, News.com
  • Posted Jan 26, 2006 9:58 pm GMT

Xbox 360 maker claims console launch was "extremely successful" but adds that "key component shortages and delays" could impact future product delivery.

From News.com

The software maker said it earned $3.65 billion, or 34 cents per share, on revenue of $11.83 billion, for the three months ended Dec. 31. Earnings were boosted by a tax benefit that amounted to about a penny per share. That compares with earnings of $3.46 billion, or 32 cents per share, on revenue of $10.82 billion for the same quarter a year ago.

Analysts had anticipated earnings of 33 cents per share on revenue of $11.96 billion, according to First Call. Microsoft said in October to expect revenue of $11.9 billion to $12 billion and per-share earnings of 32 cents or 33 cents.

Shares in the company rose slightly in after-hours trading, changing hands recently at $26.93, up 43 cents, or 1.6 percent from Thursday's closing price.

Microsoft said it saw strong PC demand during the quarter.

The company blamed the revenue miss on component shortages for the Xbox 360, which launched during the quarter. MSN also came in slightly below expectations, though results for the company's server and tools unit were better than expected. The Windows client unit and the Office business largely met expectations.

"Overall revenue did come in slightly below expectations, mostly driven by our home and entertainment unit," said Colleen Healy, a senior director at Microsoft. "We did have some component shortage issues that we believe are behind us."

Microsoft said it sold 1.5 million Xbox consoles during the holiday quarter: 900,000 in North America; 500,000 in Europe, the Middle East and Africa; and 100,000 in Japan. "This was lower than we expected due to component shortage," Chief Accounting Officer Scott DiValerio said on a conference call with analysts. "We believe this is a short-term manufacturing challenge."

Microsoft also cut its forecast for Xbox 360 sales over the first 90 days. The company had hoped to sell as many as 3 million consoles over that time, but now expects just 2.5 million units, due to capacity constraints. Microsoft said it still expects to sell 4.5 million to 5.5 million of the game consoles by June.

The software giant also saw profitability, for the first time, in two of its emerging business units. "For the first time ever, the Microsoft Business Solutions and Mobile and Embedded were in the black," Healy said.

The business solutions unit, which sells business software for midsize companies, earned $10 million in operating income, while the mobile unit posted a $20 million operating profit.

Microsoft slightly raised its sales forecast for the full year, saying it now sees 11 percent to 12 percent growth, compared with an early forecast of 10 percent to 12 percent growth. "We're feeling better about our top-line growth," Healy said.

The company also had its biggest ever quarter for share repurchases, buying back more than $7.7 billion in stock. As a result, Microsoft saw a dip in its cash balance. The cash and short-term securities balance ended the quarter at $34.7 billion, down from $37.8 billion at the end of June.

For the current quarter, Microsoft said it sees things generally in line with analysts' forecasts. The software maker expects projected revenue of $10.9 billion to $11.2 billion, with per-share earnings of 32 cents or 33 cents. Analysts have been looking for per-share earnings of 33 cents and revenue of $10.99 billion.

133 Comments

  • ALWAYSBIGDADDY

    Posted Feb 5, 2006 9:24 am GMT

    [This message was deleted at the request of the original poster]

  • ALWAYSBIGDADDY

    Posted Feb 5, 2006 9:24 am GMT

    I bought a xbox 360 it was defected (Scrached my disc and froze up) got a replacment that was a refribish one(someone else garbage) and cant get online with that one. Tech support said it was not my internet connection but the console itself. I was told 7 days ago that they would have someone get back with me, as they try to figure out the problem. Well the problem is the console is defected it doesnt take a rocket scientist to figure that out. And it doesnt take 7 days to return a phone call when you have 3 contact # to reach a person. My guess is that I'm not the only one having this problem and they dont want to replace that many consoles. Must be nice having the luxury of dragging your feet, when you have the only next generation console out. Perhaps if the PS3 or Rev was out just maybe I would get a faster response.

  • mythrol

    Posted Jan 30, 2006 7:37 pm GMT

    Microsoft turned a profit without firing 10,000 people. . .

  • jaefrmbk2k

    Posted Jan 30, 2006 7:07 am GMT

    i want the TRS-80

  • chrisdojo

    Posted Jan 30, 2006 6:16 am GMT

    already got one and sold it. i just want the REV!!!!

  • rot3k10

    Posted Jan 30, 2006 3:02 am GMT

    I a;ready got mine. But still, Micro soft needs to gt it together. They need to stop lying and just say, "This is all part of a market ploy."

  • ewjim

    Posted Jan 30, 2006 1:22 am GMT

    Just wait a little - when PS3 come out - goodby xbox360!!! Mwahahaha!!!

  • JasonQ87

    Posted Jan 30, 2006 12:35 am GMT

    Put it this way:

    XBox and XBox 360 is useless without Halo 1, 2, and 3. If it wasn't for those lame games, the system will be worst than the DreamCast.

  • Jahalo

    Posted Jan 29, 2006 11:36 am GMT

    no matter what happens, we will have to remember that microsoft may not survive the financial... Ahhhh! Who am I kidding? They're rich! What do they care?

  • PrezKennedy

    Posted Jan 28, 2006 11:34 pm GMT

    I've been enjoying an XBOX360 for two years now. It's called a computer.

  • pizzace

    Posted Jan 28, 2006 5:00 pm GMT

    So why is EB Games telling me (Who pre Ordered) that I might not get my 360 until March

  • deadesa

    Posted Jan 28, 2006 4:11 pm GMT

    Dude mkdc.... Wtf are you babbling about? I wont claim to not be a sony fanboy, because sadly i am. I have been with them since the beginning with the PS to PS2 and now to PS3. Thoughout the years of gaming on my ps1 and ps2 sony has given me nothing but a good gaming experience. So that has made me into somewhat of a sony fanboy yes. Does that itself make me a horrible inhuman person? So please dont bash me because of a personal preference. I have no beef with MS, there just not my favorite company.

  • ElHypno

    Posted Jan 28, 2006 10:48 am GMT

    Ive been through Three 360's already. The first one was fine for about three months, then it crashed. The Second one was damaged in shipping before I even opend the box and the Third seems to be working okay. The third system is totally glitchy and it freezes up for like two seconds and starts working again. The sound cuts in and out sometimes. I love my 360 but over all..... The system is crap.

  • forever_blank

    Posted Jan 27, 2006 10:46 pm GMT

    Great things are not happening at Microsoft... There has been a delay to Australia now... -.- WE WILL BE DEAD BY THE TIME IT REACHES US!! Arrrrrrrrrrrrrrrrr!

  • GamerDudeB3

    Posted Jan 27, 2006 9:44 pm GMT

    Yeah MS make that Money...

  • lordraven224

    Posted Jan 27, 2006 9:22 pm GMT

    Ok, so mostly this article talks about the Xbox360....what's it doing on the Xbox page?

  • NERDSFOREVER

    Posted Jan 27, 2006 7:30 pm GMT

    imavanas is right the games looked blah and maybe if they actually came out with better games and more systems there would be more money and more intreast in the games

  • XlpranksterlX

    Posted Jan 27, 2006 4:42 pm GMT

    If they had more to sell maybe they could have made some mo' money.

  • Imavnas

    Posted Jan 27, 2006 4:21 pm GMT

    bah, screwy news. I own a 360 but until I play more than 1 game on the 360 that I find entertaining, till I get a library of worthy games, to me the system is a COMPLETE FAILURE. Yea sure, its an entertainment hub as you can use it for this and that and..wait, my computer already does all that other stuff. I mean come on people, take a real good look at the games your playing when ur playing ur 360. 1) Perfect Dark Zero: This game is SO REMARKABLY similar to the original Perfect Dark that Im sure if the people playing the game would move to the original theyd have the same amount of fun. Better graphics? sure. New or Fresh Gameplay? Not here. 2) Kameo: quite simply the biggest rip (and a bad one at that) of Nintendos (exhausted) franchises ever made. I mean come on, one of the creatures u can transform into is ALMOST EXACTLY like Samus' morph ball in the Metroid Primes. Except, you dont get too solve fun puzzles with it, you get to attack stupid looking goblins mindlessly with its "dash" abaility. If you like this game, go out and get yourself a Gamecube and play some GOOD games, try out the original Metroid Prime, play the 2nd one, Play a GOOD platformer from either Sony or original Box (I highly recommend Psychonauts and the 3rd Ratchet and Clank). Again, all graphics, no gameplay. Quake 4? Dont get me started. Nothing new here wether your playing it for 360 or PC. Its like a complete re-hash of Q3. Gun? Its mulltiplatform and the differences between platform are graphics and thats about it (The graphics arent worth the game, believe me). Its also far too short to be a buy anyway. Amped 3? Your kidding right? This game looks uber last gen. Plenty of GOOD snowboarding games on current gen. Call of Duty 2? Yea pretty good game. Its also pretty good on the PC though. And WW2 shooters have also been redone how many times? Not worth it. Condemned? Go play Silent Hill. Youll have more fun that way. Or hey, maybe even Resident Evil 4. Seriously, nothing incredible here. Need for Speed? Again, also Multiplatform. Graphics being the real difference here, again not worth the system in anyway. Ridge Racer 6? Go play something else, nothing new here. If youve played Ridge Racer 4 and 5 youve played this game before. Not even an improvement in graphics. Sad. Your better off with almost any other racer. King Kong? Lets see, its 360 incarnation has reported to be quite glitchy, its also a multiplatform and its also a short game. Its also, AGAIN, not long enough to be a good buy. Tony Hawks: American Wasteland? AGAIN?! This has been milked for long enough. Sports Games in general? Lets see, they all LOOK better. But those nice looking graphical previews we saw for Madden before the 360's release? Yea thats not what ur going to see. And guess what? Less Features than their current gen cousins too. Hell the only sports game thats done the system justice so far graphically is NBA Live, but again, gameplay..not there. In fact for basically every sports games, gameplay, not there. Now theres two games that DO shine above the rest: DOA4 and PGR3. But would I suggest buying a 360 over TWO, just 2 decent games? and you have to like those genres too. No, I dont suggest it. In fact, I say DONT buy it. Dont WASTE your money. Wait a year, till all three systems have been released. THEN choose one to your liking. I have money, I can afford to buy all three on release. But most people dont. So be smart people, dont side yourself with any console manufacturer. These kids who say their having tons of fun with their 360? They obviously have never played many of the current games forerunners. Of course, if you STILL want to buy a 360, good luck finding one. I had mine reserved for a YEAR, A YEAR, and I was still second shipment at my store. When it gets to that extreme its no longer about the store you bought it from. I know people who couldnt reserve because the EB GAmes wasnt accepting anymore preorders because MICROSOFT TOLD THEM TO STOP. Yet they still were not able to fulfill those preorders. This is WHOLELY Microsofts fault. And No one elses. I dont forsee the PS3 having excess supply mind you. Shortages will exist. But im sure Sony isnt stupid enough to pull EXACTLY the same stunt that Microsoft, their eternal rivals pulled. Especially not considering that it WONT happen to Nintendo. So like i said,if ur still waiting for a 360, get rid of the preorder, or if you have no preorder, wait it out. Buy yourself a current gen system, (make sure to select a system with games you might be interested. The system with the most releases this year is the PS2, but that doesnt mean your favorite type of game will be on it) and wait it out. Youll thank me later (much later).

  • zongoz

    Posted Jan 27, 2006 3:21 pm GMT

    Console launch seemed pretty succesful, though I was dissapointed with the few consoles they released on launch date. I had to get mine after the new year.

  • 3604liffe

    Posted Jan 27, 2006 2:11 pm GMT

    just like the xbox did well so did the xbox 2 (360) great job microsoft GREATJOB

  • MeTaL-HeaD

    Posted Jan 27, 2006 2:05 pm GMT

    YaY

  • GunslingerMan

    Posted Jan 27, 2006 1:40 pm GMT

    " Tombackman_5 " Quote ; Unforntunetly the dreamcast wasen't hurt untill the ps2 acctually launched, and it was doing just as good as the 360 . It still is possible for sony to do another Dreamcast, with the ps3 .

  • Sagacious_Tien

    Posted Jan 27, 2006 12:48 pm GMT

    Hope that those manufacturing troubles are really over and that the Australian launch is successful.

  • 0diablo0

    Posted Jan 27, 2006 12:31 pm GMT

    yes very sucessful..........
    Microsoft should have waited for the launch so they dont run out of xboxs and it has what 10 games/??? that melt>??!!!! it's been 4 months....

    WELL DONE MICROSOFT



    (wink, wink, nudge, nudge)

    (its a hazard it will burn ur hole fricken house down !!!!!!!)
    ahahahahahahahahahaha
    ahaha

  • Tombackman_5

    Posted Jan 27, 2006 12:16 pm GMT

    Sony Was Trying To "Dreamcast" The 360 but now it looks as though Microsoft is gonna be just fine. With the PS3 Expected in November, that means Microsoft wil have plenty of time to get the hardware out there and make some money. Sony needs a good showing at E3 to compete and keep gamers in anticipation. I love my 360 and im pretty sure if the PS3 Really has Blu Ray, Ill get that too, but not at over $500.

  • x_paradigmshift

    Posted Jan 27, 2006 11:57 am GMT

    Microsoft may have been successful, but they completely botched an opportunity of a life-time. If they had planned this launch a little sooner and met the demand they created, I think they could have made A LOT more profit in America. I don't know what they were thinking in Japan, though. They are hardcore gamers over there. It's more a lifestyle there than it will ever be over here. They can see through the gimmick. All those X360 games are just ports from the previous generation of consoles: Gun, Need for Speed Most Wanted, Fifa 06, Madden 06, Tony Hawk. Call of Duty and Quake 4 were ported from the PC. Dead or Alive was probably the only game to entice Japanese gamers to buy. Hell, Japanese are Winning Eleven fans, they don't play Fifa. Problems with the system are inevitable so I don't hold that against MS. Sony fell on its face when they released the PS2. I've had to fix far more of Sony's products than Microsoft and Nintendo combined. In fact, the platform holding this monitor up I am using to type this post is a busted PS2. As far as the first come first serve deal... that was really unfair. I mean I sympathize for all the people that put their money down for pre orders because those are the real fans. I had a Microsoft fan-boy come into my store and say he was disenchanted by waiting and said he wanted to switch his pre-order for the PS3 in hopes that he will get one on launch if he did it now. Of course I can't really do that, but he didn't know that. Oh, and to all those who still think the X360 is going to be a better system than the PS3, I urge you to compare the specs again. There's a section on it that explains everything.

  • ricricpimp4life

    Posted Jan 27, 2006 11:36 am GMT

    360 time

  • LunarDuality

    Posted Jan 27, 2006 11:22 am GMT

    Of course, fewer consoles sold (at a loss) means less revenue, but also less hit on the bottom line. Funny how numbers are spun.

  • jaefrmbk2k

    Posted Jan 27, 2006 8:58 am GMT

    i love piracy

  • inferno394

    Posted Jan 27, 2006 8:47 am GMT

    Microsoft has billons! There is no excuse for them to have any shortages on there system. It goes to show u that even tho u may have alot of money, u still have clowns that don't have a clue as to what the're doing.

  • terrabreak13

    Posted Jan 27, 2006 8:32 am GMT

    The launch has it's goods and bads. The bad thing is that they cannot meet their 3 million target in 90 days and the Japanese sales are slow. The good thing is that by the time the PS3 comes out developers would have had more time with the final hardware and will be cranking out better games. Opening a new factory will also help them to get past the shortages. The head start will allow them to get in a comfort zone where they are using the hardware alot better.

  • jsloane

    Posted Jan 27, 2006 8:13 am GMT

    I want my 360!!!!!!!!!!

  • ufopuller

    Posted Jan 27, 2006 8:13 am GMT

    Microsoft needs top be put in it's place 'bout every other day

  • TequilaSunShine

    Posted Jan 27, 2006 8:10 am GMT

    Overall revenues for Microsoft's forecast came exactly on target. That tells me that Microsoft knew about the shortage of 360s well in advance. Because they didn't tell reveal this information in time, I have lost a lot of trust in Microsoft.

  • ChipsDubbo

    Posted Jan 27, 2006 7:58 am GMT

    Ding! Lol. They'd better start manufacturing more or they'll start losing even more customers than they already are.

  • DoctorGoodlove

    Posted Jan 27, 2006 7:29 am GMT

    Were Gamespot planning on covering the 20 day slip for the 360's launch date in Australia? Kind of a big deal down here guys.

  • decebal

    Posted Jan 27, 2006 7:03 am GMT

    Of course they'll say they were successful. They want people to trust them... propaganda everywhere...

  • supine

    Posted Jan 27, 2006 6:22 am GMT

    hahaha!!

  • mkdc

    Posted Jan 27, 2006 5:54 am GMT

    LMAO, Untolddreams, you are definitely taking it personal. You seem like checking and waiting for my reply every few minutes. Well, thank you for the compliment, usually when people can't refute, they just call me crazy or insane because of my superiority, and my above average IQ level. I hope you live a good life, and hopefully, you'll find a good husband that works for Sony.

  • boolow407

    Posted Jan 27, 2006 5:44 am GMT

    Okay,this article with quarterly profits, in the black, bla bla bla. What I did get, and initially began doing myself. I own a PS2, and now (Finally) a 360. When the shortage came about, and I didnt want to spend 700 plus for a system I can buy in a few months for 2-399, I looked for alternatives. One of those was building a PC that will be worth the 700 plus in a few months. Correct me if im wrong but how many of you started piecing together that Pentium dual core with sli? I really didnt want to spend the 700 plus on a console that had an unknown future. This would explain Microsofts profits in software etc. Am I wrong? Seeing now that we have gotten no word on Sonys PS3 (They still stand by the spring launch hmmmm...)and the Revolution being released next holiday season,I went with a 360 also. The games by then will be sweet enough to contend with Sonys library. No im not a fanboy, and I will be getting the PS3 and Revolution also. Just sucks everyone has to wait on Nintendo and Sony. This might give the 360 an advantage.

  • Jedi_Osborn

    Posted Jan 27, 2006 4:41 am GMT

    as far as I"m concerned the launch was a joke.

  • gamekid59

    Posted Jan 27, 2006 4:03 am GMT

    i'm not supporting any system by bill gates.
    END

  • curedawg

    Posted Jan 27, 2006 3:38 am GMT

    ...but seriously i love my 360 and i think the launch line up was pretty good (pdz, pgr3, cod2, kameo especially ) and i don't really care if it had loads of sequels as long as there good (which they are normally not, thanks EA) but the overheating issue put alot of fear in potential buyers i think . I didnt hear about it until after i got mine on the 2nd Dec (im Irish can you tell from my lack of grammer LOL) but it would have put me of getting any of the initial batches.

  • curedawg

    Posted Jan 27, 2006 3:26 am GMT

    im scared to play my 360 incase it burns my house down and destroys my ds.....

  • supine

    Posted Jan 27, 2006 1:41 am GMT

    @mkdc - MS have my support for theyr X360 as well. But friend, you're takeing this too far. The best reply to fanboyism is - ignore. As untoldDreams said to you: you are becomeing what you hate...

  • UntoldDreams

    Posted Jan 27, 2006 1:35 am GMT

    mkdc... Hahahahaha... You are quite funny for an insane person. Then again, I'm also quite crazy for bothering to talk to you. So be it then. You're right... I'm spending way too much time monkeying around with this stuff. :-)

  • supine

    Posted Jan 27, 2006 1:32 am GMT

    I salute you grayoldwolf! Good thoughts, and good said! Most people have a strong ego and that makes them agressive.. it's the same with religion... It's all about ego. But remember this people - nobody is interested in your egos needs. So keep it to yourself.

  • mkdc

    Posted Jan 27, 2006 1:29 am GMT

    Untolddreams (I'm not here to start a fight), that's exactly the attitude i was expecting from someone like you, pretending not reading my posts even though you obviously did and can't even reply with a decent argument. It's obvious that you're a sony fanboy. You disagree with whomever talks against Sony. Anyway, hopefully, by the time you reach 18 in a few years, you'll become more mature and understand what I taught you. You're just like a lost child who refuse to learn new things. And if you're old like 25 or more, then stop your fanboy-ism. You're way too old for that. Let me teach you one more thing, there's no honor joining the winning camp. Look at every other posts , they're all bashing MS. (ok fine, 20% of those posts are pro-MS) What do they have in common? They come here to bash and leave. They don't even care what I wrote, unless I direct toward them, which I don't, and you're the only one. Look at my first post in this news entry, who even cared or read what I wrote except you and eclipse? I see a lot of passion in your activities. You read EVERY SINGLE COMMENT people leave on a Sony or Microsoft news! I'm sure Sony's glad they have a loyal fanboy like you.

  • mikekare79

    Posted Jan 27, 2006 1:04 am GMT

    I got a 360, and I love it. Would be worth the wait I say. They'll get them out.

advertisement

Hot Stories

Newsmakers

Featured Stories

Submit News

Got tips? Send them in!

Related Game

Perfect Dark Zero Boxshot
Perfect Dark Zero

Game Stats

  • Rank:
    932 of 74,766
    (up by 101)
    X360 Rank:
    149 of 1,823
    Tracking:
    16,993 Track It»
    Wishlists:
    5,236 Wish It»
  • Users Now Playing:
    3,894
  • Number of Players:

    1-16, 32 Online | Offline Modes: Competitive, Cooperative, Team Oriented | Online Modes: Competitive, Cooperative, Team Oriented

  • Top 5 User Tags:
    1. perfect dark zero
    2. perfect dark
    3. pdz
    4. fps
    5. rare
  • 16+ Rating Description

    Learn more

Full Game Details »Close

Related Games

Site Blogs