Microsoft Reports Higher Game Revenues Thanks to Fewer Staff

For the quarter, Microsoft reported overall net income of $6.662 billion compared to net income in the same quarter the previous of $4.174. Much of the increase ($1.71 billion) was from deferred revenue relating to Windows 7 upgrades, just as Windows 7 drove the company's quarterly performance.

Microsoft's Entertainment and Devices Division (that includes gaming operations on the console and PC) reported quarterly revenues of $2.902 billion compared to $3.256 billion of revenue in the same quarter the prior year. EDD reported operating income this quarter of $375 million, compared to operating income in the same quarter the previous year of $130 million.

Microsoft noted that the decline in revenue was due to the fact that it sold fewer Xbox 360 consoles and fewer Xbox 360 games (largely because of bigger releases in the same quarter the previous year). At the same time, operating income increased due to reduced operating expenses. In particular, Microsoft noted "decreased headcount-related expenses and third-party development and programming costs." In other words, Microsoft's gaming profits were higher thanks to a number of firings.