Poor Xbox sales hit Microsoft results

Microsoft has posted profits of over $2.7bn for its latest quarter - a 12 per cent rise on the same period a year ago - but nevertheless has taken a hit on the back of disappointing Xbox sales.

The company posted net profit for the quarter ending 31 March of $2.74bn, which was at the low end of estimates. The company reported third-quarter earnings last year of $2.45bn, or 44 cents a share.

Revenue stood at $7.25bn, which was slightly below expectations but still 13 per cent higher than the $6.4bn it made this time last year.

Some of the shortfall was due to slow sales of the company's Xbox video game console in Japan and Europe.

Microsoft announced yesterday that it was dropping the price of its games console in the UK in an attempt to stimulate flagging demand.

The company now hopes to ship between 3.5 million and four million units by the end of June, a major reduction from the 4.5 million to six million it had aimed for.

The company expects to make between $7bn and $7.1bn in its fourth quarter, and for the next fiscal year as a whole it's looking at sales of $31.5bn to $32.4bn.

John Conors, Microsoft's chief financial officer, said: "While we look forward to slightly improved PC growth rates for the next quarter, our expectations for enterprise IT spending continue to be quite modest."

He added that Microsoft would keep investing heavily in the Xbox and will continue to focus on enterprise and small businesses sales, a strategy that "would fuel growth" in the future.