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Thursday, 07 October 2010 09:27

Microsoft should spin off Xbox 360 business

Written by Nick Farell
microsoft

Beancounters suggest
Microsoft would do really well if it spun off its Xbox 360 business from Redmond. According to a report prepared by analysts at the investment bank Goldman Sachs Redmond should spin out its entire Entertainment and Devices division, which includes all the business elements linked to the Xbox 360 home gaming console.

Goldman Sachs said that the Entertainment and Devices division can exist on its own after achieving profitability at some point in 2008, with profits reaching 679 million dollars for the most recent fiscal year report.

The outfit handles the Zune music player and the Windows 7 Phone operations, which are set to be more closely integrated with the gaming platform Xbox Live.

The report from Goldman Sachs said that Xbox products could be an appealing stand-alone entity. “Given the historical success of the Xbox and the products’ brand strength, the business could show unlocked value with forced cost discipline compared to as a piece of Microsoft.

It adds that the company’s comments suggest that management still sees significant value in combining the consumer and enterprise efforts, but we view a foot in both camps as preventing a successful focus on one strategy.

Nick Farell

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