Thursday, September 24

Analyst Shauger: Microsoft loses money on every Xbox 360 sold

On September 23rd 2009, Caris & Co. held a conference call on Microsoft in which many interesting information were released. Caris & Co. analyst Curtis Shauger warned, weakening Xbox 360 sales were likely to hurt top-line results for both the fiscal quarter ending September, and for the June 2010 fiscal year. He trimmed all his forecasts for the Redmond giant. 1st quarter revenue to $12.3 billion from $12.8 billion, and for the full year to $59.1 billion from $59.9 billion.

As Shauger notes, the cuts are based on lowered sales expectations for the Xbox 360, which he explained are being stalled by stronger demand for the PS3 since its recent redesign and re-launch, and Microsoft's own price cuts on the Different Xbox 360 models.

Shauger also points out that, hardware sales are dilutive to earnings, he says, Microsoft lose money on every Xbox 360 it sells. The analyst/investor keeps an average rating on the software giant's stock, being concerned about "the mounting pressure on its market position, and business model."

Interesting tidbits of information from Curtis Shauger, I had no clue Microsoft was losing money on every 360 sold; It'll be fascinating to see their next move if, the PS3 continues to outsell the Xbox 360 2-1. Share your thoughts.

09/24/09 Ernice Gilbert


  1. You mean, after 5 years, Microsoft is yet to make a profit on consoles sold? I call their bluff now.

    I find this very hard to believe.

  2. I call pure bulls---. Most analyst are usually wrong, check the current financial crisis. iSupply, a market leader in parts estimates, determined that MS makes even a profit on each Arcade sold at this point. After the die shrinks and contract re-negotiations they have made over the years only a fool would believe they are still losing money. They were making a very nice profit on the Elite before they cut the price. Common sense would tell you that the E & D division would be losing far more if the 360 was still selling at a loss since there is nothing else in the division that makes money. On top of that there is the R & D cost os the new Zune, Surface, Natal and the next Xbox. Author get a clue and stop trolling for hits.

  3. Well, it's not the author, he's just doing his job. I see nothing wrong with an author reporting news;

    With that being said, I don't think MS is losing money here.... It's just inconceivable that after so long, they still can't make money. Don't the cost for these parts go down? whatever.. I don't care...

  4. i think its the fact that they had huge cost associated with RROD that makes net profit still negative on xboxs sold

  5. Guys, Microsoft make money on each game sold for the X-Box, why do you think X-Box games cost more than PC ones. The X-Box have a extra charge that goes straight to Microsoft. They earn money that way, while making a loss on the actual console.

  6. This is not new. They lose money on every console but make it up on the software.

  7. I own a ps3, not a 360, but I still think it's funny how everyone is super worried about the ps3 overtaking the xbox. As long as the xbox doesnt get exclusives I care about (right now, just L4D), I couldn't care less.

    That being said, then ps3 slim has been out a month, and is riding better press than the ps3 fat, but ps3 is still trailing in total sales. MS has nothing to worry about.

  8. This won't continue for much longer, otherwise the men at the top at MS will pull out of the console industry after the continuous and massive losses their gaming department continue to make.

    It runs into the billions.

  9. Sony will triumph! It's that simply, for many times rumors signal that something is not right. Many times people say a rumor is just that, a rumor, but at times it is actually the truth and behind the scenes the muscle flexing empire is crumbling. In this case scenario, I feel MS and the X-box will become just that for consumers, "The X'd Box". Yep, it's just gonna be somewhere in the garage or storeroom looking for adoption.

    1. Stop with the fanboy attitude. the Xbox won't be taken over by PlayStation because the consoles are different to suit types of customers. I have a PlayStation and a Xbox I play both depending on my mood, assassins creed or halo? infamous or L4D?

  10. Why doesn't the author attempt to quantify why the Xbox 360 is losing money?

    ...Maybe because he didn't do his research?

  11. Guys, Sony make money on each game sold for the ps1,ps2, ps3, why do you think ps3 games cost more than PC ones. The ps3 have a extra charge that goes straight to sony. They earn money that way, while making a loss on the actual console. sorry couldnt help myself dont ps3 and x360 games cost the same??????

  12. Microsoft charges for Xbox live and Wii and PS3 don't. MS completely blows them out of the water.

    MS loses $10-$120 on every XBOX. Makes $5-$15 on every game. Makes $60/yr from 56% of live users.

    One year of live and a game or two pays back the console loss. MS will be reaping live subscriptions until well after they forget the 360 exists (Xbox 1 subscriptions held strong for 8 years). Meanwhile Sony and Nintendo will sit and watch their sales decline to nothing .