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Microsoft Quarterly Earnings (ending calendar Q3 2020) - includes Xbox Rev +30%

Kagey K

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Strangely no earnings pop to msft price..i guess the virus situation has caught up to wall Street.

Apple and Sony earnings later today, i hope they pop so my bets can pay for 3080
The expectations for these tech companies are sky high right now, even with great earnings companies are dropping.

Combine that with the uncertainty of next weeks election and things have gone kind of bearish the last couple days. Bad week to try to make some bank off of earnings.
 
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sublimit

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A revenue increase (even that of 30%) means nothing in terms of knowing their actual profits if we don't know how much money Xbox is spending to sustain Gamepass as well as development and publishing costs.
 
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A revenue increase (even that of 30%) means nothing in terms of knowing their actual profits if we don't know how much money Xbox is spending to sustain Gamepass as well as development and publishing costs.
When MS spends $7.5 billion on Zenimax pretty sure the Xbox division is fully funded. That's more than Sony's entire corporate net profits.
 
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devilNprada

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When MS spends $7.5 billion on Zenimax pretty sure the Xbox division is fully funded. That's more than Sony's entire corporate net profits.

How do you OP a MS thread but every answer you comment on takes some kind of shot at sony.. Wtf does this thread or the post you replied to even have to do with Sony?
 

sublimit

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When MS spends $7.5 billion on Zenimax pretty sure the Xbox division is fully funded. That's more than Sony's entire corporate net profits.
This is just your assumption. An investment of 7.5 billions is still peanuts for MS. This investment is obviously part of a very long term plan and long term plans always involve a lot of risk. It might succeed it might not. But if it doesn't they will still be fine. I'm not saying they are not profitable at all. They may be very profitable and they may be not as profitable as you and others may think. My point is we don't really know how much and the increase in revenue doesn't say anything when we have no clue about the costs i mentioned before. Even Greenberg had said that Gamepass business model is not easily sustainable.
 
Oct 26, 2018
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How do you OP a MS thread but every answer you comment on takes some kind of shot at sony.. Wtf does this thread or the post you replied to even have to do with Sony?
Context. The amount of profits MS makes and the amount of money they've sunk into studios shows they got cash to fund.
This is just your assumption. An investment of 7.5 billions is still peanuts for MS. This investment is obviously part of a very long term plan and long term plans always involve a lot of risk. It might succeed it might not. But if it doesn't they will still be fine. I'm not saying they are not profitable at all. They may be very profitable and they may be not as profitable as you and others may think. My point is we don't really know how much and the increase in revenue doesn't say anything when we have no clue about the costs i mentioned before. Even Greenberg had said that Gamepass business model is not easily sustainable.
See above reply.

Not every division in every company has to be big time profitable to stick around. My company has had some product lines for decades and they lose money half the time. And in the years it's profitable, it barely squeaks out profit.

Yet it's still around.

There's strategic reason beyond dollars and sense. If it was all about profits, every corporation would gas every division or product line that loses money. They don't.
 
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Aladin

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A revenue increase (even that of 30%) means nothing in terms of knowing their actual profits if we don't know how much money Xbox is spending to sustain Gamepass as well as development and publishing costs.
Even the traditional console model takes 4-5 years to turn green. When PS chief said exclusives is not a profitable business model, He meant that the investment takes long time to mature.
I am sure gamepass is same thing, you have to break even for 4-5 years, then the investment matures.
 
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MrFunSocks

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This is just your assumption. An investment of 7.5 billions is still peanuts for MS. This investment is obviously part of a very long term plan and long term plans always involve a lot of risk. It might succeed it might not. But if it doesn't they will still be fine. I'm not saying they are not profitable at all. They may be very profitable and they may be not as profitable as you and others may think. My point is we don't really know how much and the increase in revenue doesn't say anything when we have no clue about the costs i mentioned before. Even Greenberg had said that Gamepass business model is not easily sustainable.
As I've said numerous times, "game pass" in and of itself will never be profitable. It's not designed to be. It's designed to bring more than it loses to the overall company/division. Someone paying $60 a year for game pass isn't just going to not spend a single other cent on games. They're now in the xbox ecosystem. Say they buy the next COD on Xbox now that they're in the ecosystem - that's profit that won't show on any spreadsheet for Game Pass. That DLC they then buy? Profit that only exists because of Game Pass, but won't show in their spreadsheets under game pass.

Game Pass is a loss leader. Not sure why so many people cant seem to understand this.
 

Kagey K

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Microsoft don't give this information out, unless you think they're spending $3 billion a quarter while still having no games I don't think profits an issue.

I won’t ever understand the argument that somehow MS isn’t making a profit on Xbox. I don’t even know how anyone can think MS is spending somewhere in the tune of 12 billion dollars a year to keep the division running.

If anyone can show me the receipts I’d be very interested in seeing them.
 

HarryKS

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No one cares about the gaming division or Surface. Those are just for show. Azure has been a spectacular success. The best they've had in a decade. Whoever spearheaded that must be doing very well. Could actually be Nadella.
 

Alan Wake

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30% growth when they had very limited console supply on the shelf is impressive.

Must have had some growth in subscriptions and other areas to offset the hardware decline.

This. It's not just about selling boxes anymore.
 

freefornow

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Great results.
Last Q MS stated actual numbers for Gamepass (increase from 10 to 15m subs). Did they provide a number? Or is that still to come?
 

ToadMan

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Strangely no earnings pop to msft price..i guess the virus situation has caught up to wall Street.

Apple and Sony earnings later today, i hope they pop so my bets can pay for 3080

There’s no MSFT share price pop. It went down 2% in the AH.

The problem is this thread is full of people who think the Xbox results are “good” for the MS bottom line when they’re not.

The problem for MS is they’re forecasting a decline in personal computing and Xbox next quarter and flat for cloud.

That’s why the share price is down. MS share price is probably 80% based on azure and as it happens that is the cloud solution with the lowest growth rate out of AWS and Google at the moment.

Oh and some gaming specific stuff


  • Xbox content and services should grow in the low 20% range.
  • Microsoft warns of a negative gross margin impact from console sales due to investments in the platform.
  • Note that the outlook doesn't include game publisher Bethesda, which Microsoft acquired in September.

So yeah, MS predicting a loss for Xbox during its launch quarter based on investments and that’s not including the Zenimax purchase. That’s a slightly misleading way of talking about the zenimax deal - the acquisition was announced in September.
 
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Bernd Lauert

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30% increased revenue is great, especially when a 27% decrease in revenue happened with regards to hardware. This means Gamepass is doing really well.
 

MastaKiiLA

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A gaming forum is really not the right place to get proper analysis on company earnings. I see there are a few other investors in here though. As ToadMan ToadMan noted, no one should be making investment decisions based on the Xbox division. Their placement in the cloud server space is much more important, and they face some incredibly stiff competition there from Google and Amazon.
 
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Bernd Lauert

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A gaming forum is really not the right place to get proper analysis on company earnings. I see there are a few other investors in here though. As ToadMan ToadMan noted, no one should be making investment decisions based on the Xbox division. Their placement in the cloud server space is much more important, and they face some incredibly stiff competition there from Google and Amazon.

I mean yeah, Xbox is only a tiny sliver of Microsoft, IIRC it's not even 10% of the total revenue.
 

Stuart360

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I won’t ever understand the argument that somehow MS isn’t making a profit on Xbox. I don’t even know how anyone can think MS is spending somewhere in the tune of 12 billion dollars a year to keep the division running.

If anyone can show me the receipts I’d be very interested in seeing them.
Its so stupid, but until these people get hard numbers, Xbox is a failing business to them. Hell even if Microsoft gave hard numbers, people would still say its failing. I mean this is what, Xbox's 20th year?, big businesses dont usually keep a failing division open for 20 years lol.
 

DarkMage619

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Its so stupid, but until these people get hard numbers, Xbox is a failing business to them. Hell even if Microsoft gave hard numbers, people would still say its failing. I mean this is what, Xbox's 20th year?, big businesses dont usually keep a failing division open for 20 years lol.
People simply hate MS and are scared for their own favorite company. They should be just enjoying video games because I haven't seen anyone here yet who knows business better than MS. MS managed to survive without their advice.
 
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ToadMan

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30% increased revenue is great, especially when a 27% decrease in revenue happened with regards to hardware. This means Gamepass is doing really well.

That 30% number isn’t just gamepass. It includes 3rd party licensing on hardware and software.
 

Stuart360

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People simply hate MS and are scared for their own favorite company. They should be just enjoying video games because I haven't seen anyone here yet who knows business better than MS. MS managed to survive without their advice.
Even if Microsoft said Xbox revenue was up 1000%, certain people would still be like 'Xbox is da failing wivout hard nvmbers!'
 

prinz_valium

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Xbox division doesn’t make a profit. It probably never has overall but there’s a possibility the last few years of 360 sales were profitable for those years.
Xbox is HIGHLY profitable. Has most likely the highest profits of any platform holder, because they have low hardware sales. (you know the stuff with the bad margins)
MTX and Minecraft realms are nearly pure profits, tho


Also this:




But I guess people will still claim this is all just Windows profits, when Windows Pro is down 25%
But Micorosoft is increasing the profits over and over again in their MPC division, that includes Xbox

 

Aladin

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A gaming forum is really not the right place to get proper analysis on company earnings. I see there are a few other investors in here though. As ToadMan ToadMan noted, no one should be making investment decisions based on the Xbox division. Their placement in the cloud server space is much more important, and they face some incredibly stiff competition there from Google and Amazon.
Cloud is a duopoly. the distant third player is not google BUT Alibaba.

That’s why the share price is down. MS share price is probably 80% based on azure and as it happens that is the cloud solution with the lowest growth rate out of AWS and Google at the moment.
You do not undestand how companies are valued, Azure leads the enterprise cloud. Enterprise market share is a complicated business. AWS and Alibaba Cloud (1st and 3rd) are also driven by their e-commerce business. I can go as far as say that valuation of MSFT wrt to cloud business, it is still undervalued. All cloud businesses are undervalued at present. It is the prime real estate of the internet and people are just moving in.
 

ZywyPL

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Not surprised TBH, in this business money is made solely on software, not hardware, 5, 10, 50, or 100M consoles sold, doesn't matter, it's still 0$, so apparently, MS' strategy to target multiple platforms is paying off already before the gen even started.
 
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ToadMan

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So... normal game sales? Makes sense. I doubt that normal sales were up by that much though.

Well there has been a COViD bump and of course things like COD are still driving dlc which the platform holder gets a slice of.

So I think that’s where a significant chunk of the software revenue comes from.

The last full year earnings report had a little
more information on this if I remember correctly.
 

Aladin

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MSFT is moving towards a 60bn$ a year net profit target for FY2020.
One of the headlines,

 

ToadMan

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You do not undestand how companies are valued, Azure leads the enterprise cloud. Enterprise market share is a complicated business. AWS and Alibaba Cloud (1st and 3rd) are also driven by their e-commerce business. I can go as far as say that valuation of MSFT wrt to cloud business, it is still undervalued. All cloud businesses are undervalued at present. It is the prime real estate of the internet and people are just moving in.

Valuing a company can be done in many ways and none of them are guaranteed to be accurate - so your comment that I “don’t understand how companies are valued” in fact demonstrates you don’t understand lol.

Be careful with your investments dude ...
 
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Aladin

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Valuing a company can be done in many ways and none of them are guaranteed to be accurate - so your comment that I “don’t understand how companies are valued” in fact demonstrates you don’t understand lol.

Be careful with your investments dude ...
TBH to me real estate is more attractive than stock markets. Lot of factors deciding my choice. Like, My native being close to one of the biggest metropolis in the world.
 

Jigsaah

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No one said Microsoft makes no money, their console just sucks dick because there are no games. I think GamePass is a great idea. It's still far too early to tell if game quality will suffer. If Halo: Infinite is anything to go by, I believe they will.
You seem...so...angry. Calm down, Microsoft gaming division doing well only keeps other companies on its toes. It benefits the consumer. This is a reading of the pulse of the gaming industry. Its great to see its in good health
 

Ic3man

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Pretty impressive, Microsoft is killing it at the moment. Really looking forward to what else they bring to the table this generation.
 

Jigsaah

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Its astounding to me how this news triggers some people. Microsoft doing well doesnt mean Sony or Nintendo are not. There's enough to go around. Why can't everybody thrive and we be happy about that? If this was Sony you'd celebrate, but since its Microsoft you're mad? Struggle to believe? Want to toss in aby caveat you can think of? How pathetic are you exactly to look at clear evidence of success within an industry you care about and you turn your nose up at it.

I fuckin hate people sometimes.
 

Stuart360

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Its astounding to me how this news triggers some people. Microsoft doing well doesnt mean Sony or Nintendo are not. There's enough to go around. Why can't everybody thrive and we be happy about that? If this was Sony you'd celebrate, but since its Microsoft you're mad? Struggle to believe? Want to toss in aby caveat you can think of? How pathetic are you exactly to look at clear evidence of success within an industry you care about and you turn your nose up at it.

I fuckin hate people sometimes.
Without naming names there was a certain user on here that lost his shit when Microsoft bought Zenimax, and literally said he was so pissed off because 'Sony had a chance to end Xbox but didnt take it'.:messenger_tears_of_joy:

Many users on here are literally clones of this guy -

 

FunkMiller

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There are posters in this thread playing down XBox figures, and there are people in the Sony figures thread downplaying their numbers.

Both are reporting very positive figures, which is good for gaming.

Grow the fuck up.
 

MrFunSocks

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Its astounding to me how this news triggers some people. Microsoft doing well doesnt mean Sony or Nintendo are not. There's enough to go around. Why can't everybody thrive and we be happy about that? If this was Sony you'd celebrate, but since its Microsoft you're mad? Struggle to believe? Want to toss in aby caveat you can think of? How pathetic are you exactly to look at clear evidence of success within an industry you care about and you turn your nose up at it.

I fuckin hate people sometimes.
They don’t care about the industry, they care about Sony.
 
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As has always been my opinion, in this lead up to launch - the R&D, + the new studio expenses, + the gamepass subsidy push + the new acquisition cost.... there is literally no way the gaming division is making profit. Not now and not for the foreseeable future. Now I understand sunk cost etc... but again... a guessing game is futile given the degree Microsoft has gone to obfuscate and hide the Xbox segment from public scruitiny and investor pressure. It was done by design to hide bad news - only tolerated by investors for the simple fact that the other divisions do so well in comparison. But there is always uneasiness when it comes to it from the business press and investors alike. They're not fools when it comes to money.

Don't see why Jimbo should have gotten banned for making the clear obvious point - MS is not transparent in this regard compared to Sony or Nintendo. Got baited by the usual suspects. This state of matters leave a lot of what could be meaningful discussion in the trash.... what's a good or profitable business model etc? It's because of this obfuscation of information that we get heated arguments that turn to mud slinging.
 
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Bernd Lauert

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As has always been my opinion, in this lead up to launch - the R&D, + the new studio expenses, + the gamepass subsidy push + the new acquisition cost.... there is literally no way the gaming division is making profit. Not now and not for the foreseeable future. Now I understand sunk cost etc... but again... a guessing game is futile given the degree Microsoft has gone to obfuscate and hide the Xbox segment from public scruitiny and investor pressure. It was done by design to hide bad news - only tolerated by investors for the simple fact that the other divisions do so well in comparison. But there is always uneasiness when it comes to it from the business press and investors alike. They're not fools when it comes to money.

Don't see why Jimbo should have gotten banned for making the clear obvious point - MS is not transparent in this regard compared to Sony or Nintendo. Got baited by the usual suspects. This state of matters leave a lot of what could be meaningful discussion in the trash.... what's a good or profitable business model etc? It's because of this obfuscation of information that we get heated arguments that turn to mud slinging.

I'd also like to see Xbox profits, but ultimately it doesn't matter. They're playing the long game. It took Amazon 20 years to turn a profit and nobody cared.
 
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iHaunter

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You seem...so...angry. Calm down, Microsoft gaming division doing well only keeps other companies on its toes. It benefits the consumer. This is a reading of the pulse of the gaming industry. Its great to see its in good health
I'm not angry at all, I have no stake in it. Microsoft makes more or less money does not affect me as I'm not in that ecosystem. What I said was all true. Without competition, Sony wouldn't get the PS Plus Collection.
 

FritzJ92

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These replies are sad, why make it about Sony? Be happy that it's more money to be invested into xbox.

I used the popular comments I've seen from people doubting MS...if anything I've kinda of disregarded nay sayers and promoted xbox's financial health.
 

JackMcGunns

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So does this confirm Xbox is dead yet? anyone? *cricket noises intensify*

Where are all the usual GAF analysts predicting Xbox's impending doom?



Maybe their crystal ball was right all along :unsure:

Except when they saw DOOM, they didn't realize it was Bethesda's acquisition :messenger_grinning_sweat:
 

wolffy71

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Its almost like no amount of positive news is good enough. I think some people should just assume MS knows more about running a business than they do and if MS is investing in a division, there's probably a reason.

Gaming is really healthy right now and if you're on GAF this should be good news to you. None of us will gain anything by a big platform failing. Quite the opposite.

Success drives investment and innovation. Good things for us.
 

Jigsaah

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I'm not angry at all, I have no stake in it. Microsoft makes more or less money does not affect me as I'm not in that ecosystem. What I said was all true. Without competition, Sony wouldn't get the PS Plus Collection.
The idea that Xbox has no games is false. Maybe they have no games that you're interested in...thats your opinion and you're welcome to it. But alot of people love the exclusives they do have.

So no, not everything you said was true.
 

iHaunter

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The idea that Xbox has no games is false. Maybe they have no games that you're interested in...thats your opinion and you're welcome to it. But alot of people love the exclusives they do have.

So no, not everything you said was true.
Give me the line-up of launch that has worth-while games that aren't Medium? Which isn't even a full game to begin with? Might they have good games down the road? Possibly, as for right now, they have nothing.
 

Jigsaah

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Give me the line-up of launch that has worth-while games that aren't Medium? Which isn't even a full game to begin with? Might they have good games down the road? Possibly, as for right now, they have nothing.
That's not the argument here first of all. You said "Xbox has no games"...a Sony fanboy talking point that been rehashed over and over for years. Since you wanna change the argument though, it could be said that neither launch is absolutely fantastic. The Medium...not a full game..what does that even mean? Is Demon's Souls not a full game because it's a remake? Is Miles Morales also not a full game because a 12 hour expansion? I don't see it that way.