XBox Growth Drives Microsoft's Quarterly Results

1:29 PM PST 01/19/2012 by Georg Szalai

Revenue in the tech giant's entertainment & devices unit rose 15 percent to $4.24 billion in the latest period.

NEW YORK - Microsoft's Xbox video game business brought in a record holiday season as fiscal second-quarter revenue in the entertainment & devices unit, of which it is part, rose 15 percent over the year-ago period to $4.24 billion.

The strong demand gave the division the strongest revenue growth of all company units in the latest quarter and helped Microsoft beat Wall Street profit expectations for the latest period.

The technology giant also said Thursday that the Xbox 360 console's installed base now totals approximately 66 million, and there are 18 million Kinect sensors. Plus, the Xbox Live offering now has 40 million members worldwide, an increase of 33 percent from the year-ago period, Microsoft said.

"This holiday season was the strongest in Microsoft history, thanks to good sales execution and compelling products like Xbox 360 and Kinect,” said Microsoft COO Kevin Turner. “We are seeing a lot of excitement for new devices, from Windows 7 Ultrabooks to new Windows Phones, as well as growing anticipation for Windows 8.”

On a conference call, Microsoft management said that console growth currently is looking slower than previously thought, with the company expecting high single digit growth in the current quarter, and mid teens growth in the coming quarter.

Meanwhile, Microsoft said its online services unit, which houses search engine Bing, recorded revenue of $784 million, up 10 percent. Bing's U.S. market share grew to 15.1 percent, while Bing-powered market share, including properties of partner Yahoo, was approximately 27 percent, the company said.

Overall, Microsoft reported fiscal second-quarter earnings of $6.62 billion, nearly unchanged from $6.63 billion in the year-ago period. Its quarterly revenue of $20.89 billion marked a 5 percent improvement over the year-ago period.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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