Microsoft's game division suffers $1.89B shortfall

[Zaphod]

As long as Microsoft keeps showing investers a 40% ROI based on their stock price, based on the previous 12 months, I don't think they will care. A 1.89 billion charge taken when you have revenues of 13.37 billion for a quarter is not going to make a huge difference to shareholders...yet.

It's interesting to note that the stock price has soared over the past 12 months even with all the losses annouced by Microsoft. Their software side is so lucrative and so profitable that big losses in other divisions are easily offset.

[JTK]

Originally Posted by Zaphod

As long as Microsoft keeps showing investers a 40% ROI based on their stock price, based on the previous 12 months, I don't think they will care. A 1.89 billion charge taken when you have revenues of 13.37 billion for a quarter is not going to make a huge difference to shareholders...yet.

It's interesting to note that the stock price has soared over the past 12 months even with all the losses annouced by Microsoft. Their software side is so lucrative and so profitable that big losses in other divisions are easily offset.

^^ This was the point I was trying to make earlier either in this thread or another like it somewhere else around here.

[Maximus]

Well from deep inside a few companies I have worked with:

MS are taking valuations on the entertainment division, it could be for one of two reasons,

1. Selling up (though no one will buy it).

2. A massive (think in terms of billions) write-down on the value of the division to be taken in the next financial year.

I would go for the second one, but who knows?

[What'sHD]

maxpower1987, what do you mean by writedown? As in further losses similar to but bigger than the warranty issue? thanks

If further fiascoes lie ahead for E&D, perhaps this is why Bach sold stock. It could not have been just the warranty cos that amount hardly made a dent in their valuation and I am guessing Bach knew that before he sold... 2c

[Maximus]

Originally Posted by What'sHD

maxpower1987, what do you mean by writedown? As in further losses similar to but bigger than the warranty issue? thanks

If further fiascoes lie ahead for E&D, perhaps this is why Bach sold stock. It could not have been just the warranty cos that amount hardly made a dent in their valuation and I am guessing Bach knew that before he sold... 2c

Basically another one off charge caused by a revaluation to the worth of the division, basically because of RRoD the division accrues a lot of losses and MS need to show that somewhere.