Reduced manufacturing costs offset warranty charges 

Following the decision to set aside USD 1 billion for Xbox 360 repairs, the year-end loss for Microsoft's entertainment and devices division has reached 1.89 billion - up 47 per cent from last year.

Revenues for the year were up by 28 per cent to reach USD 6.08 billion, which the company said was due to increased sales of hardware, software, TVs and mobile devices.

During the last quarter of the year Microsoft shipped 700,000 Xbox 360 units - down from 1.8 million during the same period last year. Console sales were lower for the quarter but sales of 360 accessories and the Zune media player helped to offset this.

Revenues for Xbox and PC games fell by 28 per cent to hit USD 265 million.

Fourth quarter EDD revenues stood at USD 1.16 billion, a year-on-year fall of 10 per cent which Microsoft said was due to "decreased Xbox 360 console sales".

The division made a loss of USD 1.2 billion, attributed to the cost of the Xbox 360 repair program. However, according to Microsoft, a reduction in the cost of manufacturing Xbox 360 units did partially offset this.

As reported previously, Microsoft Corp. reported a 15 per cent increase in revenues for the year to USD 51.2 billion.

The company said it is confident its entertainment and devices division will turn a profit during this financial year.