Xbox Division to be sold?

Not sure how likely this is but it looks like MS has been in the red for quite awhile with the Xbox division

http://www.neogaf.com/forum/showthread.php?t=659801

If it's on the internet, it must be true.

This isnt a made up story.


Here is the main article

http://www.bizjournals.com/seattle/blog/techflash/2013/08/long-time-microsoft-analyst-predicts.html?page=all


Microsoft shares are up more than 2 percent today to more than $32 per share after long-time analyst Rick Sherlund for Nomura upgraded the company’s stock to a “buy.”
In April, Nomura downgraded the company to “neutral” on what Sherlund referred to as “poor fundamentals.” But now, things are looking up. Why?
Activist investors.
We’ve written about activist investor ValueAct before – the investment group spent $2 billion to take a 1 percent stake in Microsoft (NASDAQ: MSFT) back in April when the share price was below $30 per share.
The organization has a history of taking a stake in a struggling company and pushing for major changes.
On Thursday, Sherlund wrote that ValueAct is likely to have the support of shareholders when it pushes for a seat on Microsoft’s board of directors.
That’s a tricky thing for Microsoft, though. Bill Gates is still chairman of the board, and he’s good friends with CEO Steve Ballmer. It’s no secret some shareholders are fed up with Ballmer and want to see him step down.
“Among the many shareholders we spoke to, Steve Ballmer’s strategy inspires little confidence,” Sherlund wrote.
Microsoft was slow to respond to the smartphone and tablet market, Sherlund wrote, and that has cannibalized the company’s business. He described shareholder frustration as at “an all-time high” when the company reported disappointing earnings in June and the share price tumbled.
Sherlund suggested in his note that it might be best to give ValueAct a seat on the board and have them work behind closed doors, rather than opening it up to a public proxy fight. That, however, would likely take longer.
“A decision by the board at Microsoft to offer a nomination for a board seat could keep the activist agenda behind closed doors and take longer for shareholders to see potential benefits,” Sherlund wrote.
Things could get interesting in the coming weeks. ValueAct must notify Microsoft of a proxy fight by Aug. 30 – next Friday – and there is an analyst meeting at Microsoft on Sept. 19.
ValueAct will likely call on Microsoft to make some big changes. Sherlund – who is likely well-sourced on this – believes ValueAct will suggest Microsoft sell off Xbox to another tech company.

While MS gaming does make money, the investors at MS expect to make "tons of money" like they do with Windows/Office.

Xbox isn't going anywhere though even if it is not posting profits like the software division. Xbox is part of a long term strategic plan that is integral for MS's survival into the future.

Apple/Google/Amazon all have living room units getting ready to roll out to fight for this new market.

MS spent about 10 years losing money on gaming and eating losses from dev costs for things like the Kinect. They have been positioning themselves and it has been expensive.

Still, they are managing to turn a profit in the gaming division finally the last few years. Rich folks always wont' more.......but, but.......Win 8 is going to make a gazillion bucks compared to xbox....dump the xbox.....low roi.

Maybe they buy Sony to get rid of their primary competion in the console business. About as likely honeslty.....

Somebody posted a earnings chart on that linked forum with Sony Nintendo and MS.  If these numbers are even close to correct. MS has pumped a ton of money to Xbox.

Numbers look about right to me.

Xbox 360 launched in late 2005. The original xbox lost a ton of money. Then, the RRoD insurance is estimated to have cost MS over 1 billion. I read that Kinect development was over 500 mil.

Since 2008, the division has been in the black. Should go back to red this year with the new console I'd bet though. I believe MS is rumored to have over 70 billion in cash reserves so I think they are good to ride it out if it eventually does what they planned originally which was to prevent Sony from being #1 in US living rooms.

Since the launch of the PS3 in 2006 the xbox gaming division has done pretty good relative to Sony's gaming division.

Looks offical to me.

Almost 7 billion wow!!! No wonder the shareholders are up in arms

Hell!............if they sell it i have about $20 in my wallet. 

Nely wrote:

Almost 7 billion wow!!!  No wonder the shareholders are up in arms

Can you imagine how Sony's shareholders must feel?

Not only can't their gaming division seem to turn a profit sense serious competition entered the market. Their other electronics have also suffered the same fate with Samsung and others pushing them more and more towards bankruptcy every year it seems.

I hope they have it turned around for this generation. While Microsoft could afford to dump 5 billion on the original xbox to get a spot at the gaming table, Sony cannot afford to have a repeat of the PS3 with the PS4.

If they gaming division at Sony continues the cycle of billions of dollars of losses on PS4, they won't have 70 billion in cash lying around to keep the thing up and running.

Seemed odd to me, so I picked one value to test.  Nintendo's 2009 number seemed high so I searched for the 2009 earnings report.  Here it is.

The Japanese gaming company recently presented their fiscal year results for the year ending March 31, 2009, and despite all the economic issues that have arisen in the last 6 months, they reported record sales and profits. All in all, Nintendo reported sales of 1.838 trillion yen (about US $18.5 billion) compared to 1.672 trillion yen a year ago. They reported a net income of about 279 billion yen (about US $2.813 billion), compared to 257 billion yen a year ago.

The spreadsheet is junk.

Here are some accurate, more recent numbers and articles on the finances of both Sony and MSFT.

http://www.ign.com/articles/2013/02/07/sony-q3-financials-are-out

'Overall, though, Sony seems to be recovering from a disastrous previous financial year, in which the company posted a loss of 520 billion yen (£4bn, or $6.4bn). It is making an operating income of 83bn yen ($954m) compared to an operating loss of 65.9bn yen last year (around $730m at the time). What this means is that the actual business of making and selling Sony products is currently profitable, which wasn't true this time last year.

But the company is still not in profit: so far this financial year, the loss stands at 50.9bn yen ($650m). Last financial year the loss was just over 200bn yen at this point, so that shows significant recovery.'


http://www.engadget.com/2013/01/24/microsoft-reports-q2-2013-earnings/

Microsoft is reporting that during the second quarter of its 2013 financial year it set a revenue record by raking in $21.5 billion. Of that $6.38 billion was pure profit, lining shareholder's pockets to the tune of $0.76 per share. While EPS was down year-over-year, net income was up dramatically from $5.87 billion a year ago and $5.31 billion last quarter.