Xbox losses nearly doubled at Microsoft

SAN FRANCISCO — Losses at Microsoft’s Home and Entertainment division, which includes the Xbox game console, nearly doubled in the most recent quarter compared to a year earlier as revenue tumbled and marketing spending increased, Microsoft disclosed in a regulatory filing on Monday.

The division, which also includes the Xbox game console, PC games, consumer hardware and Microsoft TV, posted an operating loss of $190 million for its fiscal third quarter that ended March 31, compared with a $97 million loss a year earlier, according to the filing.

Quarterly revenue at the division fell to $493 million from $943 million a year ago, according to Microsoft’s internal accounting mechanism. The drop is largely attributable to lower sales of Xbox game machines and games in all geographic regions, Microsoft said in the filing. Last year’s quarter marked the launch of Xbox in Europe and Japan and sales following the U.S. launch in the preceding quarter.

In a setback for Microsoft earlier this month, when leading games maker Electronic Arts  lifted the veil on its major announcements for this week’s E3 expo, it said that ten online sports games it would roll out at the show would be for Sony Computer Entertainment’s PlayStation 2 — an implicit snub for the Xbox.

The downward trend continues from Microsoft’s second fiscal quarter, when losses at the Home and Entertainment division also nearly doubled. Microsoft announced its third quarter results on April 15, but at that time did not detail operating profit and loss per segment.

The filing with the U.S. Securities and Exchange Commission (SEC) comes just as Microsoft announced new games and features for its Xbox and the Xbox Live online service on the eve of the Electronic Entertainment Expo (E3) this week in Los Angeles.

Microsoft’s cash cows remain its Client and Information Worker groups, which include its Windows operating system and Office productivity suite, respectively.

Operating income at the Client segment was up to $1.99 billion in Microsoft’s fiscal third quarter from $1.88 billion the year earlier. The Information Worker unit earned $1.94 billion, up from $1.61 billion a year ago, according to the filing.

The Server Platform segment at Microsoft increased its operating profit to $421 million from $343 million as a result of increased server shipments, Microsoft said.