Windows, Office, stem Microsoft losses

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Microsoft has revealed that four of its seven divisions are loss-making operations, showing the extent to which the company relies on its Windows and Office products.

In a filing with the US Securities and Exchanges Commission (SEC), Microsoft said its Home and Entertainment unit, which is home to the Xbox and Microsoft's WebTV products, lost US$177 million in the first fiscal quarter, on revenue of US$505 million.

The loss makes Home and Entertainment Microsoft's worst performing division. Microsoft said it is prepared to wear losses on the Xbox in order to build market share against tough competition from Sony and Nintendo.

Microsoft's MSN internet service also continues to lose money, but reeled in last year's Q1 loss of US$199 million to US$97 million in the current quarter, based on revenue of US$531 million.

Business solutions, which houses the Great Plains and Navision software products, faced a loss that swelled from US$39 million in Q1 last year to US$68 million in the current period, based on revenue of US$107 million.

Microsoft's Mobility Group, which looks after Pocket PC and Windows CE-based products, narrowed its loss from US$48 million in the corresponding quarter last year to US$33 million, on revenue of US$17 million.

Microsoft Windows remained firmly in the black, recording income of US$2.5 billion on revenue of US$2.9 billion. The result was well up on earnings reported in the same period in 2001, when the company booked US$1.7 billion.

Microsoft Office, which now comes under the Information Worker banner, performed similarly well, with revenue of US$1.9 billion on revenue of US$2.4 billion.

The Server Platforms segment, which includes SQL Server and Microsoft Exchange, posted operating income of US$519 million on revenue of US$1.52 billion, compared with operating income of US$350 million in the same quarter last year.

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