Xbox Live grows to 39M active gamers — but Xbox hardware sales down 17%

The Xbox One has a lot of online users.

Microsoft didn’t say how many Xbox 360s and Xbox Ones it sold last quarter, but it does point out that its online-gaming service is growing.

Xbox Live now has 39 million monthly active gamers, according to Microsoft’s quarterly financial report. That’s up 28 percent year-over-year, but this number also doesn’t really tell the whole story. Clearly, this means that Microsoft has 39 million people logging onto Live, but it doesn’t indicate in any way how many of those are paying Gold members. It did say that Live’s revenues were up 17 percent and game revenue climbed 66 percent thanks to Minecraft.

Another thing that Microsoft didn’t mention is how many Xbox systems it sold. Normally, during the company’s quarterly report, it’ll mention how many Xbox One and Xbox 360 systems it has sold. For example, back in July, we wrote that Microsoft sold 1.4 million Xbox consoles during the three-month period comprising the company’s fourth quarter.

Microsoft made no such disclosure for its fiscal Q1. We’ve reached out to the company to ask if it can share those figures with us, and we’ll update this post with any new information.

What the company would say is that total Xbox hardware sales were down 17 percent year-over-year primarily due to slumping Xbox 360 sales.

The Xbox One has sold well compared to the Xbox 360, but it has lagged behind its competition from Sony. The PlayStation 4 is already at more than 22 million systems sold worldwide, while estimates put the Xbox One at somewhere in the 15 million range.

Recently, Xbox boss Phil Spencer even commented on he’s unsure if the Xbox can catch up to the PlayStation.

“I don’t know,” said Spencer. “You know, the length of the generation — [Sony has] a huge lead, and they have a good product.”

To stay in the game, Microsoft has aggressively cut the price of its console and bundled it with attractive software. An early, alleged Black Friday sales leak from Dell claims that the company will offer an Xbox One bundled with the sci-fi shooter Gears of War Ultimate, an extra controller, and postapocalyptic role-playing game Fallout 4 all for just $300. That’s an insane deal considering Fallout 4 is probably the most anticipated release of the fall.

Microsoft was able to cut the price of the Xbox One to help it outsell the PlayStation 4 last November and December, which are the biggest months of the year for game sales by far. But with Sony cutting the price of the PS4 to $350, repeating that success may prove difficult for the Windows company.

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Alphabet is buying back more than $5 billion in stock next quarter

Alphabet screenshot

Today Alphabet, the umbrella company which owns Google, Nest, and all of Google’s money-eating “moonshot” experiments, announced plans to buy back more than $5 billion — specifically $5,099,019,513.59 — in stock. That’s roughly one percent of Google’s $451.3 billion market cap.

In typical Google fashion, that goofy-looking figure translates to a particular number: the “square root of 26 e18th,” as Forbes’ George Anders first noted. There are 26 letters in the latin alphabet, obvi.

This isn’t all that surprising. Alphabet CFO Ruth Porat hinted last quarter that the company wasn’t opposed to returning some of its cash to shareholders. Now it’s actually happening.

This announcement is one of many factors driving Alphabet’s stock price up as high as 12 percent during after-hours trading today, in addition to the company’s stronger-than-expected earnings results.

For more on Google’s first quarter under Alphabet, technically the company’s third fiscal quarter, head here.


Microsoft beats in Q1 2016 with revenue of $21.7B and EPS of $0.67

A Microsoft logo is seen on an office building in New York City, July 28, 2015. The global launch of the Microsoft Windows 10 operating system will take place on July 29.

Microsoft today reported its earnings for the first quarter of its fiscal 2016, including revenue of $21.66 billion and earnings per share of $0.67. Analysts had expected the company to earn $21.03 billion in revenue and earnings per share of $0.59.

Microsoft’s stock was up 1.76 percent in regular trading. In after-hours, however, the company is up another 5 percent.

Office 365 had a strong quarter, adding 3 million subscribers (19.7 percent growth quarter-over-quarter) to hit 18.2 million. Office commercial products and cloud services revenue grew 5 percent with Office 365 revenue growth of nearly 70 percent.

At this point, steady Office 365 growth is not much of a surprise. The company is slowly but surely converting its traditionally most lucrative software business into a subscription revenue stream.

Microsoft saw Surface revenue fall from $908 million in Q1 2015 to $672 million in Q1 2016. The company will naturally be hoping to reverse that trend with the introduction of the Surface Pro 4 and the Surface Book.

Windows OEM revenue declined 6 percent, though Microsoft noted this is still better than the overall PC market. The company says Windows 10 launch “spurred PC ecosystem innovation and helped drive hardware mix toward premium devices” but the reality is it wasn’t enough to see growth.

Phone revenue declined 54 percent “reflecting our updated strategy,” Microsoft said. That is in reference to the employee cuts and CEO Satya Nadella’s plan to focus on fewer devices.

Microsoft’s server and cloud businesses did well. Azure revenue and compute usage in particular more than doubled year-over-year.

Xbox, however, was a mixed bag. Xbox Live grew to 39 million active gamers, but Xbox hardware sales were down 17 percent year-over-year.

This was a particularly important quarter for Microsoft. The company released new versions of its biggest software products: Windows 10 and Office 2016.

This quarter also marked a change for how Microsoft reports earnings. The company now breaks down its results into three operating groups:

  • The Productivity and Business Processes segment includes results from Office and Office 365 for commercial and consumer customers, as well as Dynamics and Dynamics CRM Online.
  • The Intelligent Cloud segment includes results from public, private and hybrid server products and services such as Windows Server, SQL Server, System Center, Azure, and Enterprise Services.
  • The More Personal Computing segment includes results from licensing of the Windows operating system, devices such as Surface and phones, gaming including Xbox consoles, and search.

There’s also a “Corporate and Other” section, which the company throws in what doesn’t fit into its main three categories above.

Productivity and Business Processes revenue declined 3 percent to $6.3 billion, Intelligent Cloud revenue grew 8 percent to $5.9 billion, and More Personal Computing revenue declined 17 percent to $9.4 billion. In short, the Windows group performed the worse, largely thanks to a shrinking PC business and a change in strategy for phones.

Microsoft will be looking to turn a few trends around over the next few quarters. But analysts were expecting a lot worse, which is why the company’s results and stock are overall being seen positively.

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Amazon beats expectations with $0.17 EPS and revenue of $25.4B

A just-delivered Amazon box is seen on a counter in Golden, Colorado August 27, 2014.

It’s a good day for Amazon. After announcing third quarter earnings, its stock is up 12 percent in after-hours trading.

Today Amazon posted better than expected earnings of $0.17 per share on revenue of $25.4 billion. The company was expected to post a loss of $0.13 per share on revenue of $24.91 billion.

Over the last year, Amazon’s stock has been on a upward trend. Investors were especially pleased last quarter when the company achieved much better than expected earnings of $0.19 a share and net income of $92 million; stock shot up 18 percent in after-hours trading.

This quarter in particular, Amazon Web Services has shown a lot of growth, pulling in $2.08 billion in revenue in Q3 —that’s a 78 percent jump from last year.

Amazon also continued to push international growth with a one-hour delivery in U.K, the roll-out of Prime Video to Japan, and invested $190 million into its India operations and fulfillment center.

Expansion of its Prime services continues with the launch of one-hour delivery in three new markets: London, Seattle, and San Francisco. Amazon also extended its same-day shipping service to five midwestern states and added restaurant delivery to its list of Prime services (though it’s currently only available in Seattle), not to mention steep discounts of subscriptions to the Washington Post.

This quarter there was also a bit of a kerfuffle around a New York Times story that painted Amazon’s corporate work environment as painfully strenuous. Months later, Amazon’s head of PR issued a long rebuke on blogging platform Medium, which resulted in a public back and forth with the New York Times. Despite the media attention, Amazon’s stock price doesn’t appear to have been affected.

Looking ahead, Amazon says it estimates net sales to be between $33.50 billion and $36.75 billion with an operating income range of $80 million to $1.28 billion in Q4.


Amazon Web Services generates $2.08B in revenue in Q3 2015, up 78% over last year

At Amazon Web Services' 2015 re:Invent conference in Las Vegas on Oct. 7.

Amazon today disclosed in its quarterly earnings that its subsidiary Amazon Web Services (AWS), the largest public cloud currently available for hosting websites and applications, brought in $2.08 billion in revenue for the third quarter of 2015, which ended on Sept. 30.

AWS revenue for the quarter was up 78 percent year over year. That growth rate was almost as large as last quarter, when AWS revenue jumped by a huge 81 percent year over year. Nomura was expecting AWS to post 50 percent in revenue growth for the third quarter, according to MarketWatch. That estimate proved conservative.

The cloud came up with $521 in operating income for the quarter, up from $98 million in the third quarter of 2014. AWS’ operating expenses in the quarter were $1.56 billion.

AWS faces formidable competition from the Google Cloud Platform, Microsoft Azure, IBM SoftLayer, and other companies. HP just announced the impending closure of its public cloud. Dell, which is buying EMC — which is a part owner of VMware — is consolidating the Virtustream public cloud with VMware’s vCloud Air public cloud services.

Here’s a chart showing AWS revenue growth in recent quarters,compared with the numbers Amazon previously disclosed in order to give investors an idea of AWS revenue, the “Other” category for North America revenue:

A chart of AWS revenue growth for the third quarter of 2015.

Above: A chart of AWS revenue growth for the third quarter of 2015.

Image Credit: Jordan Novet/VentureBeat

Amazon stock was up more than 10 percent in after-hours trading immediately after the earnings release dropped. Find our coverage for Amazon’s third-quarter earnings here.

Google’s first earnings as Alphabet: Strong $18.7B in revenue, $7.35 earnings per share, $5B in buybacks

Google HQ

Today the corporate behemoth formerly known as Google shared how much cash it made (and spent) during its third quarter.

Alphabet Inc. — the silly name for Google’s new parent — scraped up $18.7 billion in revenue and $7.35 earnings per share during the quarter. Not bad, considering analysts expected it to report $18.53 billion in revenue and $7.21 earnings per share. Analysts predicted strong growth for Google, which reported $16.52 billion in revenue during last year’s third quarter, and $6.35 earnings per share.

As Alphabet CFO Ruth Porat hinted earlier, the company announced it will buy back “$5,099,019,513.59 of its Company’s Class C capital stock, commencing in the fourth quarter of 2015.”

Following the release of today’s report, Alphabet’s stock jumped more than 12 percent after hours.


Google isn’t going away, of course. The search firm, sitting within Alphabet, is the parent company’s most important entity. But the newly named holding company may offer more transparency for investors. Eventually, it will provide a closer look at Google, Nest, Fiber, Google Ventures, and all the side projects burning through Google’s ad money. Unfortunately for us, this new insight won’t arrive until Alphabet’s fourth-quarter report. So today, as with every Google earnings report before, we’re really just focusing on Google.

More, from Alphabet:

The new operating structure is being introduced in phases. For financial reporting purposes, we expect the reorganization will result in disclosing our Google business as a single segment and all other Alphabet businesses combined as Other Bets beginning in the fourth quarter of 2015.

Regardless of today’s results, the pressure is on for Google to prove it can grow its mobile search business, limit heavy spending on ambitious “moonshots,” and uncover interesting monetization opportunities for services like YouTube.

Predictably, the company has yet to reverse the deceleration of cost-per-click — how much it makes when users click on Google-powered ads. Also unsurprising: The amount Alphabet spent on research and development this quarter appears to have hit record highs. Google’s traffic acquisition costs (TAC) totaled $3.6 billion during the third quarter, up from $3.3 billion during Q3 2014.

For the lazy, here’s a slide deck Alphabet shared with investors this afternoon.

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You Can Now Tie Your Twitter And Vine Profiles Together, Vine Displaying Your Total Loops

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