Since all the troubles that have grown on Microsoft's Xbox 360 due to their mistakes, sales have dropped 60%. For this quarter, Microsoft shipped 700,000 units compared to 1.8 million in the fourth quarter of 2006, making a 61% drop.

Microsoft blamed the $1.06 billion charge for extending the warranty, which was their fault. Then, Microsoft was hit with a number of hardware failures. Following that, they were hit with two class action lawsuits in the past 2 weeks. Even more problems occurred like Peter Moore leaving Microsoft for "personal reasons", but it turns out it jumped to Electronic Arts and then Sony announced a $100 price cut, but can Microsoft keep up with that?

In its earnings statement for the quarter, Microsoft said it shipped 700,000 Xbox 360 units during the period, compared to 1.8 million in the fiscal fourth quarter of 2006 -- a fall off of 61%.

Microsoft blamed the 183% increase in the EDD operating loss on a $1.06 billion charge against earnings that the company incurred to cover the cost of extending the warranty period for the Xbox 360 to three years. The move came following Microsoft's recent admission that the gaming system was suffering from an "unacceptable" number of general hardware failures. Microsoft has also been hit with two class action lawsuits in the past two weeks claiming that a design flaw in the Xbox 360 causes the system to irreparably scratch game discs. Microsoft has denied the claim.

Earlier this week, Microsoft announced that Xbox chief Peter Moore was leaving the company "for personal reasons." It was later disclosed that he had jumped ship to video game publisher Electronic Arts. In the meantime, rivals Sony and Nintendo have been stepping up competitive efforts. Sony recently announced a $100 price cut on certain PlayStation 3 units while Nintendo continues to enjoy robust sales of its new Wii system.

Synergized via informationweek.com »