Xbox 360 Sales, Losses Up

The plan for Xbox 360 is, as always: lose a little on every sale, make it up in volume.

TheStreet.com reports on Microsoft's financial guidance, noting that while revenue for the Home and Entertainment division is up on increased 360 sales, this has only caused losses to go up by a larger factor:

One big culprit: spending on the Xbox 360. Sales have gone up significantly, but because Microsoft loses money on every unit sold, the company's profitability suffers. Liddell said the delay of Sony's PlayStation 3 was an opportunity for Microsoft to grab share, and he forecast heavy spending on the console throughout the rest of the fiscal year, but not into 2007.

The company's Home and Entertainment segment, which makes the Xbox 360, increased revenue by 80% to $1.1 billion due to strong demand for the console. But the division's loss grew even faster, ballooning by 121% to $388 million.