NEWS - Monday, November 5, 2001


Microsoft to lose $1 bln on Xbox

LOS ANGELES, Nov 5 (Reuters) - Microsoft Corp. (NasdaqNM:MSFT - news) could lose as much as $1 billion on its new Xbox video game console before breaking even in fiscal 2004, an influential Wall Street analyst said on Monday.

Morgan Stanley analyst Mary Meeker said the console faced competition in the short term but had long-term opportunity.

``We believe that Xbox could lose around ($1 billion) ... before breaking even in (fiscal 2004) if the product is reasonably successful,’’ she said in a note to clients.

The Xbox launches in the U.S. on Nov. 15, in Japan in February and in Europe in March. Three days after the Xbox’s U.S. launch, Nintendo Co Ltd. will launch its new console, the GameCube, in the United States.

Those two new consoles will compete with the already established PlayStation 2 from Sony Corp. , a unit analysts and industry observers expect to dominate the market this holiday season.

Microsoft has said it will spend as much as $500 million on the initial marketing for Xbox, which will retail for $299, the same price as PlayStation 2 and $100 more than the GameCube.

Microsoft had said it would have between 600,000 and 800,000 units available at launch, but later said it could not be sure. Most industry executives now expect them to ship 300,000 units at launch and 1 million to 1.5 million by year’s end.

Shares in Microsoft were up 2.5 percent at $62.94 in morning trade on Nasdaq.
Source: http://www.yahoo.com/

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