1 Billion??? If only I was older and had more money I'd be shorting some real shares of Microsoft right now.
Maybe Microsoft will finally learn that releasing something without making sure it works right isn't good business, (like their many OS's) and it will finally catch up with them. If it wasn't their fault it wasn't their fault I'm not sure of the details right now but it seems to be a pattern with this particular company doesn't it!
A report on BNN (Canada's MSNBC of sorts) just indicated that Microsoft will be announcing a 1 Billion dollar charge this quarter as it deals with an 'unacceptable level' of hardware problems with Xbox 360.
It is extending warranty coverage (retro actively) to 3 years.
Any thoughts here on MSFT's earnings? I am surprised they did so well with all the indications pointing to Vista not selling well. It appears they did very well on Vista and Office 2007 upgrades. 65% rise in profit for MSFT is amazing.
@Deltaneutral, I agree the media strategy is interesting, but Apple (AAPL) is a much better play for that. MSFT is dominated by Windows Vista and Office 2007 risk as those businesses make up the largest parts of MSFT's cash flow.
Vista is currently a great risk--Dell recently announced it is switching back to Windows XP as an option for home users after offering that option to small businesses as well. Many customers are expressing no interest in upgrading. If Windows Vista doesn't come through, we will see the stock fall as a large portion of the company's growth was predicted to come from this upgrade cycle.
There have been some pretty bearish comments regarding the Xbox division from an investors perspective recently. I think the Xbox is a great gaming platform but a terrible business. Of course, Microsoft says they are thinking long-term, but at what point do you just cut it loose when the red drips deeper and deeper?
I believe MSFT is hoping the Xbox 360 is their way into consumer electronics, similar to Sony's play with the PS3. However, rather than being an impetus for consumers to re-buy Sony movies on the Blu-Ray format, MSFT will sell content over Xbox Live (similar to Apple's big iTunes business today). This will hopefully also have synergies for the Zune, but I don't see it happening. They really haven't made it widely known to consumers that the Xbox 360 can do what an Apple TV does (cept requires an additional WiFi adapter). I don't think many consumers perceive the 360 as a media hub.
jayen, that article wasn't written by Forbes. It was pulled from Roger Ehrenberg's personal blog "Information Arbitrage." Someone had mentioned this story a few days ago. He writes some very interesting perspectives on the video game industry, and many others.
I find it quite amusing that Forbes uses data from VGChartz as reference for this article. They should write something about theSimExchange sometime soon.
Japanese Failure Dooms XBox 360
"After taking a step back and looking at some objective numbers (taken from Microsoft's own financial statements and comparative console sales figures extracted from VGChartz.com and Wikipedia.org), I have concluded that gaming has been a disastrous endeavor for Microsoft, particularly from an investment perspective.
The seeds of this failure are evident from its sales performance in Japan, particularly when comparing its 18-week sales figures (which is about how long the Wii, made by Nintendo and PS3, made by Sony have been out) relative to those of the most successful console releases."
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Bringing up stats about xbox live. Interesting the charts of online played:
The top 10 games played over Xbox Live worldwide:
1. Halo 2
2. Gears of War
3. Hexic HD
4. Tom Clancy's Rainbow Six Vegas
5. Call of Duty 3
6. Call of Duty 2
7. Tom Clancy's Ghost Recon Advanced Warfighter 3
8. Elder Scrolls: Oblivion
9. Crackdown
10. PGR3