Microsoft's entertainment division shows $165m profit for Q3

Microsoft has reported record profits for its latest quarter, contributed to by the strong performance of its Entertainment and Devices Division.

The division, which includes Microsoft's Xbox 360, PC and Zune businesses, showed a $165 million profit on revenues of $1.67 billion for the quarter - which was up from $1.63 billion in 2009.

That sat alongside record revenue of $14.5 billion for the company overall for the period and profit of $4.01 billion.

For the first nine months of the company's fiscal, Entertainment and Devices Division revenue was down five per cent, from $6.68 billion to $6.46 billion. However profits increased a massive 242 per cent, from $249 million to $851 million.

Microsoft said that it had shipped 1.5 million Xbox 360 consoles over the quarter, down from 1.7 million in 2009, and 8.8 million consoles over the first nine months of fiscal 2010, down from 10 million in 2009.

A 22 per cent decrease in the cost of manufacture for the Xbox 360 helped to offset costs - however the price of operating Xbox Live increased over Q3, said Microsoft, while R&D was stepped up by $31 million, or seven per cent.

Sales and marketing expenses decreased by $60 million or six per cent, primarily due to decreased marketing for the Xbox 360 platform.

Xbox 360 and PC game revenue was down by $240 million over the nine months, or five per cent, which Microsoft put down to a lull in the number of Xbox 360 consoles sold, decreased revenue per console and decreased revenue from Xbox 360 games, offset in part by increased Xbox Live revenue.

The company's overall revenue of $14.5 billion for the quarter was a six per cent increase, while profit was up by 35 per cent on last year. The strong growth was attributed to the successful launch of Windows 7 and other well-performing sectors such as the Bing search engine, Xbox Live and emerging cloud services. Revenue was up two per cent to $46.4 billion over the nine months.