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Businessweek
Second-quarter sales won't meet expectations, in part because the next-generation console isn't shaping up as quite the red-hot seller predicted
There's little doubt that Microsoft's soon-to-be-released Xbox 360 game console will be a hot seller this holiday season -- but just how hot was called into question on Oct. 27, when Microsoft (MSFT) released fiscal first-quarter results.
Sales in the current quarter will come in about $300 million lighter than Wall Street analysts expected, the company said. The culprit, say analysts, is lower-than-expected shipments of the next-generation Xbox console, due out Nov. 22.
GO FIGURE. Analysts had expected between 2 million to 2.5 million consoles to ship in the quarter. But after checking with retailers and other Microsoft partners, Goldman Sachs analyst Rick Sherlund says he believes that figure will be between 1.5 million to 1.7 million.
For Sherlund and others, the reason for the possible shortfall wasn't immediately clear. And Microsoft executives, who have never offered guidance about Xbox shipments, didn't provide any clues on a conference call after results were released. "I'm not sure why they're not shipping more," Sherlund says.
Microsoft did say that it expects to ship 4.5 million to 5.5 million consoles by the end of the fiscal year. Microsoft has a lot riding on the success of the Xbox, and the outlook -- however upbeat -- wasn't cheery enough to boost its shares. The stock slumped in extended trading.