Xbox 360 shipment estimates lowered

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Microsoft plans to cut back its original Xbox 360 hardware shipment forecast for the fiscal year ending June 30 from a range of 13 to 15 million units to just 12 million. 

CFO Chris Liddell said Thursday that the company is anticipating a slow half of the year that requires a cautious outlook.

"We are just being cautious about the second half. It was always going to be a slow half. We've done very well in the first half. There is a reasonable amount of inventory in the channel," Liddell said.

"The healthy inventory that we've seen is one of the factors behind what we're looking for in the second half,'' he added.

The news came after Microsoft posted fiscal second-quarter results that beat analysts' forecasts.

The new Windows Vista computer operating system's long-delayed launch was largely to blame for Microsoft's 28% drop in profits in the last three months of 2006. Earnings fell to $2.63 billion, or 26 cents per share, from $3.65 billion, or 34 cents per share, during the same period last year.

Still, the results exceeded the 23 cents per share that analysts had expected from the Redmond, Wash.-based software maker, according to Thomson Financial.

Revenue rose to $12.5 billion, a 6% gain from $11.8 billion in the year-ago quarter. Analysts were expecting just shy of $12.1 billion.

Microsoft's overall revenue gain was greatly helped by the entertainment and devices division, which includes the Xbox 360 console and the blockbuster game "Gears of War." The entertainment division's revenue hit $2.96 billion, a 76% jump.

The unit lost $289 million, however, roughly even with last year.
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