MS doing better than expected - CFO

Microsoft CFO Chris Liddell has said that the company is doing "better than we hoped" after the company's Entertainment and Devices division posted a 70 per cent rise in revenues.

During the three months ending September 30, Microsoft's overall revenues rose by 11 per cent to hit USD 10.81 billion (EUR 8.53 billion). Operating income was also up by 11 per cent at USD 4.47 billion (EUR 3.53 billion), and net quarterly income stood at USD 3.48 billion (EUR 2.75 billion) - the equivalent to USD 0.35 (EUR 0.28) per share.

Revenues for the E&D division were up from USD 606 million (EUR 478 million) a year previously to USD 1.03 billion (EUR 813 million), which Microsoft attributed to a high demand for Xbox 360 consoles, software and peripherals plus the Xbox Live service.

A total of six million Xbox 360 units have now been sold - 3.6 million in North America, 1.7 million in Europe and around 700,000 in the rest of the world. Record cumulative attach rates for software and peripherals have been achieved in the US, and there are now more than 4 million users of Xbox Live.

However, the E&D division still made an operating loss of USD 96 million (EUR 75.8 million) - down from USD 173 million (EUR 137 million) during the same period last year, when the Xbox 360 had yet to go on sale.

Commenting on the recent reduction in manufacturing costs for the 360 during a conference call, Liddell said, "We are seeing lower cost per console... we're doing slightly better than we hoped for." He added that Microsoft expects the console to be "cost neutral over the console's life".

Microsoft forecasts that 10 million Xbox 360 units will have been sold by the end of 2006, by which time console owners will have a catalogue of 160 games to choose from.

"We believe that the functionality of the Xbox 360 console, games portfolio, and online offerings are well-positioned relative to forthcoming competitive consoles," the company said in a statement.

"We also believe launching in advance of competing consoles will provide a strategic advantage for the long-term success of Xbox 360."