Xbox Shortages Impact Revenues in Q2'06

Six of Microsoft’s seven business units showed a profit in the quarter ending Dec. 31, 2006, but revenues were lower than expected, at US$11.84 billion, because of shortages of Xbox 360 game consoles. In addition, operating income was down slightly from last year (as expected) to US$4.66 billion because of higher marketing costs and negative margins on the Xbox 360 console. Meanwhile, the company continued its aggressive stock buyback plan and raised its dividend to US$0.09 per quarter.

(For an overview of the quarter’s financials and how they compare with previous quarters, see “Microsoft Financials for the Last Five Quarters“.)

Emerging Businesses into the Black

For the first time ever, six of Microsoft’s seven business units showed an operating profit during the company’s second quarter of fiscal year 2006 (Q2’06), thanks to higher-than-expected revenues in the company’s two smallest businesses, Microsoft Business Solutions (MBS) and Mobile and Embedded. However, revenue shortfalls in the other emerging businesses, MSN and Home and Entertainment, caused the company’s total revenue to come in about US$60 million less than expected.