Microsoft has released its earnings report for FY17 Q1, revealing $22.3 billion in non-GAAP revenue and $6 billion in net income. That's up from the same quarter a year ago, which saw Microsoft bring in $21.6 billion in non-GAAP revenue on $5.7 billion in net income. Also worth noting is that this FY17 Q1 release is the first time Microsoft has reported gaming revenue, which comes in at $1.9 billion for the quarter.
Here are the highlights from the release:
- Revenue was $20.5 billion GAAP, and $22.3 billion non-GAAP
- Operating income was $5.2 billion GAAP, and $7.1 billion non-GAAP
- Net income was $4.7 billion GAAP, and $6.0 billion non-GAAP
- Diluted earnings per share was $0.60 GAAP, and $0.76 non-GAAP
Further down in the report, Microsoft notes that while Windows OEM revenue was flat year-over-year, it saw phone revenue decline by a whopping 72%. Gaming revenue is also down slightly by 5% compared to the same period last year. As usual, Microsoft will be holding a conference call and webcast at 2:30 p.m. Pacific time / 5:30 p.m. Eastern time at its investor site to discuss the earnings.
Reader comments
Microsoft reports $1.9 billion in gaming revenue in FY17 Q1 earnings
Well, apple released their 1/4 earnings and beat MS, by a few billion. So, does this mean MS underperformed with Nadella in charge? is he FINALLY getting fired?
I wonder what their costs were in gaming to earn that $1.9 billion.
Next few years will be tainted by writedowns and restructuring costs of LinkedIn purchase though.
It is not dead, it is still a zombie, a rotting zombie. When the flesh is disappearing completely, it will be dead. Now it's a zombie, reeking, shooing people from buying them. Anyway, almost dead.
This is so cool, I remember the haters 2 years ago when they thought Nadella was going to divide Microsoft and sell Xbox division, they were so wrong.
I feel so happy 2 years later to know Microsoft is now making billions from games, this will shut up a lot of mouths.
Are you sure you read the entire article?
"Gaming revenue is also down slightly by 5% compared to the same period last year."
1.9 billion is good, however, it's better when the revenues are going up, not down.
Yup not looking too rosy: "Gaming revenue decreased $110 million or 5%, primarily due to lower Xbox hardware revenue, offset in part by higher revenue from Xbox software and services. Xbox hardware revenue decreased 26%, mainly due to lower prices of consoles sold and a decline in volume of consoles sold."
He (along with Elop) would have if he'd thought he would have been able to get away with it from the board at one stage.
They're not making billions from games. Revenue isn't profit.
However they're certainly going in the right direction. Listening to gamers, introducing new IP, making great hardware and maintaining and expanding the best online service in the industry.
"2 years ago"
There are people today who post on this site claiming that Xbox is the next product to be destroyed/sold by Nadella. Read one of those posts just a day or two ago.
There is nothing to sell. All they did was move Xbox from being a specific hardware platform to a service that runs on Windows 10. Now any device that runs Windows 10 is a Xbox. Now MS can elect to stop making specific Xbox hardware if they choose or continue to sell what is essentially Xbox branded PCs.
Share prices have hit $60.78 in after hours trading...I made sure to invest in Microsoft after the announcement that Windows 10 would be free made their stocks plummet to $40 a share. First stock investment, but as a Microsoft follower, I had a good feeling that things would end up much better.
That's impressive, its above the highest of all times back in 1999 before the IT bubble.
The difference is that today Microsoft is very deversified company, they build software but its a Service instead of a Product. They also build and sell hardware (Surface, Xbox), have strong presence in Azure enterprise cloud services, offer telecomunication services with Skype, offer search services like Bing, and also build and sell games (Minecraft, Halo, etc)
The only aspect where Microsoft is not so strong is on Mobile phone OS market share (Windows Mobile is just 1%), but their Microsoft apps in Android and iOS are so good that they are convincing millions to change from Google productivity mobile services to Microsoft productivity mobile services.
Damn, would have been a good time to get in. I can't make myself get into stocks though.
Microsoft's largest individual shareholder is not totally happy though how the new boy executes: "Ballmer told CNBC: "The phone business, I'm not apologetic about. Current management chose to go in a different direction.""
http://www.cnbc.com/2016/10/21/microsoft-successfully-makes-transition-t...
It's not a decline in phone revenues, it's a retrenchment of revenue
That is a hefty amount!
Phone revenue is no surprise as they basically had no products to sell. Cloud is where it's at. Cloud will be the driver for MS.
Exactly, can't make much from a handful of 'quiet' models.
But wait for the 'W10M is a dead OS' crowd, because I can guarantee you they will be here soon nevertheless.
How is W10M not dead?
It had a larger marketshare (overall, not just specific countries) than iPhone did at one point, and yet now its not even in rounding-error % figures.
People like to claim that Linux for the desktop is still alive, even though it has a lower marketshare in its category than WP has in its category.
People (and many of the tech news sites) like to claim that ChromeOS for the desktop is still alive, even though it has a lower marketshare in its category than WP has in its category.
No, WP is not good. But if we need to claim it is dead, there are many other products out there from Microsoft's competition that are also dead.
Windows Mobile may have had a larger market share than the original iPhone, but Windows Phone never even came close.
Actually that depends on the country, I thought it was somewhere like Italy that it eclipsed iOS and was second to Android.
UK market was an oddball in that, it was a good market, with a higher than expected prescence
It was all L520 sales and people buying the Nokia name. It wasn't sustainable especially after they didn't upgrade to any of the higher end Windows phones. If the market share in those countries mattered at all, Nokia wouldn't have decided to abandoned Windows Phone.
Posted via the Windows Central App for Android
Nintendo kinda weak in the game industry
Xbox is such a failure. *sarcasm*
Xbox as a hardware platform, financially has been a failure. Which is why Xbox is now being rolled into Windows 10 and the MS Store. No longer specific hardware based, although they could continue to sell hardware with the Xbox name on it. Lumia, Skype and Xbox have been money pits, as a subset of Xbox, Minecraft may eventually get into the black but that is probably a 10-15 year path since its going to take that long to recoup the $2.5b. Cloud, Enterprise, and Office is basically where its at for MS.
Xbox has been in the black for six years now and surface has been in the black for two years. Stop being stupid!!!!
"Xbox has been in the black for six years now and surface has been in the black for two years. Stop being stupid!!!!"
Most of the finanicials dealing with the Xbox being in the positive was due to phone patient income being put into the Xbox division to mask the loses. Just the loses on the original Xbox was around $4b, loses on the Xbox 360 are never going to be known as they were masked with funds from other products. I didn't mentioned the Surface, they were selling about 1m per quarter and is a premium product, I would expect any additional Xbox-branded products to be similarly offered i.e. at a premium. Not sure why you are so angry about this. I wouldn't doubt $10+ billion has been lost on the Xbox hardware over the last 15 years, and that might be on the low end. It shouldn't shock to anyone at this point to see them roll the Xbox into Windows 10 as a service.
http://www.gamesindustry.biz/articles/2013-11-07-huge-xbox-losses-hidden-by-patent-royalties-says-analyst
Don't forget that revenues also come from services like Xbox Live, Games purchased via Windows Store (Minecraft, but also AAA titles which can now be purchased on Windows and played on Xbox)
I don't see how you can say 1.9 billion in net income from Games is a bad news.
I never said it was bad or good. I responded to the guy saying "Xbox is a failure /s". Revenue for the quarter has very little to do with whether the Xbox is a failure, imo, it just means it brought in X amount of the dollars for the quarter. Xbox as a hardware platform is a failure, Xbox as a service that runs on Windows 10 devices stil remains to be seen. I don't really see them as them being related at this point. One was hardware, now Xbox is a software service.
The losses on the 360 have been well known for years now. And your cute little link to a 2013 story is irrelevent now as is your assersion that xbox is over $10b in the red.
Actually the losses have not been disclosed, the original Xbox losses were, if I remember correctly $4b. MS did take a $1b write down for the RROD in 2007 on the Xbox 360 but no further break down has been give that I recall, which is why the article was posted. The article is still relevant to my response as MS was hiding huge losses in the Xbox division on an annual basis. Ask MS why they didn't, don't, and won't release specific Xbox hardware losses. Not sure why you are hurt by my comments, this has been known for years and years, I think the $4b loss on the original Xbox was disclosed over a decade ago. Either way, probably a good reason to roll Xbox into Windows 10 as a service... red. Xbox as a hardware platform, huge financial failure, Xbox as a new Windows 10/MS Store service remains to be seen. Of course, the confusion might be that people think revenue = profit. Of course, ignoring the legacy costs of a product one can make a product look like it is making money on an annual basis.
http://www.engadget.com/2005/09/26/forbes-xbox-lost-microsoft-4-billion-and-counting/
It looks like further disclosure of possibly $5-7b on the original Xbox has been suggested.
http://n4g.com/news/1789459/former-xbox-head-says-original-xbox-lost-between-5-billion-and-7-billion
Now you know why Xbox is no longer a specific hardware and is now a service running on Windows 10 devices... nothing but red down that former path. Xbox is just a service that runs on Windows 10 devices or is a name put on specific Windows 10 hardware... they could just as exasily license the name out to HP, Dell, etc at this point. Xbox branded hardware will probably just be premium hardware like the Surface.
So you had to go back 11 years to find out about something that was released 15 years ago to find your "evidence" to back up your claim that XBox is a failure? That was 15 years ago, how about the 360 which was hugely successful, and for the XB1 which Microsoft said they will not be selling for a loss? Since Microsoft makes about $10 per game sold ($20 for 1st party games), and since generally sell more on XBox than the PS, I would say they have made back their investment.
As stated in the article, MS was/is hiding the true loses, see article. They sold at a loss usually does not reflect the R&D and startup of production, but I don't recall MS saying they didn't sell it at a loss, but even if they sold it for even producing it still doesn't account for R&D, startup cost, marketing, services, etc. Your confusion is because you don't understand basic accounting terms. My statement that it's a financial failure is based on the last known numbers, if you would like a further breakdown of the numbers... good luck. At this point, I seriously doubt they could tell you how much they lost on the Xbox division, which is why its probably being rolled into Windows/MS Store. The article from 2013 should help further help your confusion on the matter, the Xbox divison has been losing billions for a very long time. The numbers given in all the articles generally talk about all funds in the division including your game sales example... its a financial loser.
1) If you want to reference another article, please do not use Engadget. They whored themselves out to Apple long ago. They have as much credibility as VGChartz, which is 0.
2) So losing money 15 years ago means it is still a loser? Apple when releasing the very first iPhone had such poor sales that they lost money. They had to refund $100 back to those who bought the phone and drop the price by $100 before sales picked up (remember that MS writedown that you and others like to mock? Yep, Apple did one too). So does that mean that the iPhone is still a financial loser?
You are simply one of the common trolls that infest this site. Someone who references articles from sites that have no credibility and then blame people like myself who you claim "don't understand basic accounting terms." If you understand accounting terms and know better than I do, send along your MBA or CPA credentials. Somehow, I doubt you have them. Don't bother replying until you can supply those credentials. Even a license # will do.
You like to use the word "probably" a lot. A quick tutorial for you - you say "probably" and it means that you haven't a clue what you are saying, you are just throwing things at the wall and see what sticks.
The financials will not show the losses as the articles pinpointed, as MS refuses to truly disclose the losses as investors were demanding it to be sold, of course, there would be very little to sell anyhow to a third party beside game ips. You don't understand basic accounting terms, very obvious to me. You seem to be a troll that has nothing but hot air and is somehow hurt over this. I sounds like you don't have a clue as you have offered nothing of value to the discussion.
http://blogs.barrons.com/techtraderdaily/2013/11/25/microsoft-xboxs-1b-plus-loss-makes-it-a-sale-candidate-says-nomura/
Losing money 15 years ago, the divsion was losing billions per year for years and years. As far as I know there is no dispute over this.
http://www.gamesindustry.biz/articles/2013-11-07-huge-xbox-losses-hidden-by-patent-royalties-says-analyst
Not sure why you are so hurt over this, very strange. Haha reply with my credentials. All you have is Microsoft earned 1.9b in revenue, revenue is not profit neither does it show the profit from a product from inception, but you knew that.
I used probably because its speculation as to why they are rolling Xbox into Windows 10. As far as them losing money on the Xbox division, well that is just a fact.
Please provide your CPA or MBA credentials to prove that you know the basic accounting terms that I do not. I don't understand why you are so hurt over giving this information. It may even be good for business, showing how much you know.
1. I don't have to prove anything to you, and I never said I was a CPA anyway.
2. It is already apparent you don't know basic accounting terms from your responses.
3. It is also apparent you are very upset over this conversation, for what reason, I really can't imagine.
What part of the articles do you disagree with or do you have additional information which help shed light on your POV? The model was to sell hardware at a loss and recoup the loses with game sales, online sales, services, etc., they problem is, that never happened with Xbox, even without including the billions in R&D, the division was losing in the $1-2b per year range in the Xbox 360 days.
www.gameplanet.co.nz/news/g50fdc6bc35139/Microsofts-Xbox-division-doesnt-make-money-may-be-sold-claims-analyst/
$1.9b of revenue is just that, revenue, its not profit and probably will never fill in the hole that has been created over the last 15-17 years. Of course, some companies don't mind losing money on a division if there is a strategy to it.... which is why MS believed with Xbox.
So in other words you are misrepresenting yourself. Scurry along little troll.
I never misrepresented myself at all. You apparently like to make stuff up. Haha, maybe you should get into the hiding numbers business. This is not working out for you so well. Sorry it hurts your feelings but the Xbox division is a big Loser, with the capital L, financially. Next you are going to tell me how much Lumia made MS. Haha.
Call it a day nohone. You will never beat an idiot in an argument. They always win on experience ;-)
here is an accounting term for you, sunk costs. The R&D and expenses from the past are sunk cost and are irrelevant to making future decisions. The question is if they are making money now and if they are projected to make money in the future. There is also another issue with accounting. Administration and other general expenses are allocated to the various departments. This can cause a department to look like it is taking a loss even if it is actually helping increase the bottom line. As long as the profit margin is positive, the product will help cover the fixed costs and will increase the overall profit. This information is not available in the financial statements and it is pretty much impossible to analyze the xbox division by looking at the financials. It actually doesn't matter what we think. Management seems to think there is value in the xbox division.
Apple reportedly losing a shedload on phone division. Heard it on a 'money' programme on the BBC. Also, Samsung losing money hand over fist in 'other' Markets. Phone profits down, shipping dept in serious bother. They are shunting money around to 'disguise' the huge losses, and then came the N7.
MS not the only one bouncing funds around. I thought Xbox was actually turning a profit as a 'whole'. The oneS is selling like hotcakes in UK.
So what's a few billions lost over a decade and a half when the paid 20 something billions just recently for LinkedIn. I don't doubt your analysis on the matter, but the shareholders just want steady income. The Xbox losses were just the price they paid to get where they are now
You keep saying Microsoft won't release specific hardware losses yet you seem to know exactly what they are. Where is your data coming from?
Some general losses have been reported by sources within the company and after people have left on the original Xbox numbers range from $4-7b, it is also known as its was released via SEC filings they took a $1b writedown on the RROD issues in 2007. The exact real losses on the Xbox 360/One will never be known as they combined several units into one and threw in phone patient revenue to hide the losses. However, just because the EXACT number is not known, a guessimation can be made from backing out the phone money. Microsoft has never disputed this, nor will it be addressed as they never wanted to cut the Xbox division.
But it's about the games and services in the console market and not the hardware, even Sony (and I think even Nintendo to) has sold previous iterations of their consoles with a loss. But game licenses and their services make up for that loss.
Posted via the Windows Central App for Android
Michael87... those are the losses even if they made additional funds from game sales and services. That is the reason why 3-4 years ago there were so many financial articles on the Xbox division being canned or spun-off, of course, there was not much to spinoff.
I think I disagree with you. XBOX is a great asset for Microsoft and a strong consumer facing brand, for a otherwise enterprise focused company.
If Sony can keep it's entire conglomerate in black figures with the Playstation brand surely XBOX as the second player in the market can turn a profit and it definitely isn't hemorrhaging money by the billions a quarter.
Surface and XBOX are two great hardware assets for Microsoft and I think for Microsoft to survive it needs to keep making it's own hardware.
Even Google became fed up with it's OEMs and started making Google branded Pixel Phones to push their vision of Android. OEMs cut corners and/or don't care for aftersales support and it is tarnishing the platform.
Microsoft would be foolish to put it's faith back in to the hands of it OEMs. That failed strategy was what got them in trouble with the rise of mobile anyway.
Luckily this time around Microsoft is leading the charge with the Hololens, Surface brand and Microsoft branded continuum capable smartphones showcasing their vision for Windows 10 while leaving enough room for their OEMs to fill in the gaps or undercut Microsoft on pricing for similar devices.
And as for XBOX, Microsoft needs this consumer facing brand and they need PC gaming to fend off Androids invasion of the consumer side of the Desktop PC category and the XBOX brand is key to this survival when executed properly.
I never said it wasn't an asset, I said it was a financial failure up to the point. Here on out now its a service that runs on Windows 10, its no longer a specific hardware platform although they might sell hardware with the Xbox name on it. I have no idea if the MS store will be successful or not, GWFL was not and the Win8 store was not.
XBOX never ever was about the hardware, but always about the software (=game licensing and first party games).
You can't only look at it from a hardware perspective, you have look at the ecosystem as a whole, I'm certain that XBOX is financially sound from that point of view.
Posted via the Windows Central App for Android
The 2013 articel you dredged up also said "As for the narrowing cast of potential CEOs for Microsoft, Sherlund said it is likely that Ford's Alan Mulally will be appointed to the position by December." Gee, that was really prescient /sarcasm. Do you have more recent articles to justify your $10+ billion loss number. Better yet, can you do your own financial analysis with the recent Microsoft financial reports to show us that? Besides, can you tell us why Microsoft is willing to lose 2 billion on this platform since 2001? If you think Microsoft is stupid then you better look into the mirror.
I never said they were stupid, you sound like you are using a strawman argument by claiming I said something I didn't. $2b per year of losses per year add up very quickly plus the original Xbox lost $4-7b, plus the write down of $1b for RROD. $2b a year losses didn't start until the second-half of last decade. A more realistic loss from Xbox is probably over $15b, $10b would be on the low end. Still unsure why people are getting upset by this.
Losing money/breaking even on console hardware sales and gaining on games/app sales is a norm in the console business. So your point is what besides trolling... If you knew anything about business you would know that having a negative on the taxable accounting sheet doesn't mean that you are actually in a bad situation. Sometimes going negative is required for greater gains for the overall profitability of the corporation. In fact taxable accounting losses verses real losses can be different. The taxable accounting losses can bring down the tax burden so that you can invest in hiring people and other structures that build up the business. You can transfer those losses to next year and build the company even further. If a corporation couldn't do this then it would be destroyed by the government very quickly, people would be out of jobs and economy would suffer greatly.
Srenia la
Its not just the hardware its the whole division, those are division numbers not just hardware losses. $2b year lose is associated with the whole Xbox division or product, not just hardware related. Not sure what the rest of your statement is, but no the Xbox division has been a huge negative so now its being rolled into Windows as a service and the MS Store. As stated in prior comments, the games and servcies never came close to covering the gap which is why you have a negative $2b per year lose, that is not a one year event.
Don't judge from the pass, look forward.
Where do you guys come from ? Microsoft knows that they will never make much money, if any on the hardware. Money is all made from the software. It's like the movies, a game with the full dev team, promitional stuff, costs a few million but, they sell a few million copies and there is a large profit margin on it. Then they have the Xbox store where they make a nice % of ever sale that goes through.
The Xbox is needed as a way to use the software (games), so they need to provide hardware. Accessories they do make a fair margin on...controllers, headsets, adapaters, etc.
I just want to add this in who cares....
Let's put it bluntly Microsoft are making platforms, Xbox used to be a box now it is a service run on any box.
Same with Cortana on all mobile o/s
Same with office
Same with skype
Surface range - believe band and phone will branch here soon!
Heck windows too!
Quite a brilliant strategy, one brand name across all platforms, putting in the hardware/ software to evolve an eco system on the basis of fund in here for a loss to balance and profit later!
Mission accomplished.
Microsoft Gaming is caching up. It needs more Japanese titles to make sales there
Yeah. If they can crack the Japanese market they would be even more golden. Sony and nintendo has it in a strangle hold though.
A damned difficult market to crack.
Millionaire franchises like Square Enix's Final Fantasy are sold on Xbox One, I think that is a small step but shows how Microsoft is making great partnerships with japanese studios to provide great games for the Xbox platform.
Microsoft should have bought Sega when they had the opportunity.
Microsoft making it rain...