Microsoft just released its Q4 and fiscal year financial
results, which showed the company’s growth at a 15 percent increase over
last year. Overall, things were good at Microsoft, though the company’s Entertainment
and Devices Division (EDD) weren’t one of the company’s financial stars.
The EDD once again posted losses, but this year a stunning $1.89
billion – about 47 percent more than the previous period’s $1.28 billion loss
from last year.
For Q4, operating losses increased 183 percent to $1.2
billion, mostly due to Microsoft’s over $1 billion charge for its new
three-year warranty against the Red Ring of Death.
Microsoft attributes the majority of its operating loss to
the change
in Xbox 360 warranty policy and slowing
sales, though the loss was "partially offset by decreased Xbox 360
console manufacturing costs." Also helping to pick up the slack were sales
of Zune, video games and Xbox 360 accessories.
Overall revenue was down during Q4 at $1.16 billion, but fiscal
year revenue was up 28 percent to $6.08 billion.
Despite this rather hefty shortfall, Microsoft expects great
things for the upcoming year. In May, Robbie Bach, president of the EDD, said
that the division would be profitable by 2008.
“It's a business that will be profitable next year—we'll make money next year
and that will be the first time, which is pretty exciting,” said Bach. “And
then the next two or three years are the place where you need to make tracks,
and the next two or three years are where you have to make money.”