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Microsoft Investor Wants To Fire Ballmer And Sell Xbox Division

Xbox so far hasn't been a profitable venture but what would be the point of dismantling or selling the division now that it is making money? Sony lost billions on PS3. Gaming is a very tough business and requires a lot of investment if you want to be a console maker. Otherwise every tech company would just build a console and ship it out.

You say that it is making money now... but there is also a console transition now as well. Uncertainty is a bitch.
 
Xbox so far hasn't been a profitable venture but what would be the point of dismantling or selling the division now that it is making money? Sony lost billions on PS3. Gaming is a very tough business and requires a lot of investment if you want to be a console maker. Otherwise every tech company would just build a console and ship it out.

Gaming's also a drop in the bucket, money-wise, compared to Microsoft's other divisions (which are kind of in danger).

There wouldn't be much point to dismantling it, but selling it could be a good idea.

Anyhow, your post makes a good case for why it's actually *not* all that desirable to be a console maker.
 

Minions

Member
This article is why I think it's funny that people seem to think that MS has so much money that it can just money hat any exclusive that it wants. This is hardly the first time that shareholders have been upset with MS entertainment division, they're already quite upset with the amount that MS has invested with absolutely no net return. And looking at how much it's invested into Xbox One, they're not going to be seeing a bet return for a long time. Shareholders could give a shit if the device will be profitable in 5 years, it's very much what have you done for me lately with these people.

And 1% of a huge company like MS is quite a lot, not to mention they hardly the only shareholders who want Ballmer gone.

They have tons of money; Money is not the issue. The issue is they are a business. Just because they throw tons of money at things (NFL; 3rd party exclusives; smartglass?) does not mean it makes good financial sense. Investors do not like things that are not profitable. Investors want a ROI/Dividends.

1% is pretty huge in the grand scheme of things. It is a small percentage of the whole, but when the whole owns .001% each that adds up to 100% it means that 1 person has the same say as thousands (if not hundreds of thousands) of people that also invested.

Interestingly, these people want Microsoft to change their focus. Similarly to Cisco selling off their consumer market hardware (Linksys) and focusing on their enterprise offerings. This is an awesome idea if what you sell is better than the alternatives and has a high percentage of profit ($10,000 switches do!)
 

DOA

Member
UwdTasL.jpg

nintendo is doomed
 

Y2Kev

TLG Fan Caretaker Est. 2009
Oh please oh please proxy fight please it will be so delicious oh pleasee

OMG lol at the person who said xbl is a license to print money. Wasn't there that survey that just came out that said it made ms like 5 billion over 10 years? That is a hilarious pimple on ms' ass.
 
Does anyone see Xbox One being profitable?

The R&D must have been astronomical. And the moneyhats are out in full force. Plus all of the dedicated servers they are subsidizing.

And if the system doesn't sell as well as the 360, I can't see the XB1 being profitable.
 

The Flash

Banned
Who would buy the Xbox division though??? Its a mess that needs cleaning up at the moment (at least when speaking of executives).

As far the Xbox division goes they seriously need to reevaluate the upper management. The people who are in middle management and who are a lot more aware of what gamers want in a console/service need to start taking over. I don't know how far up Albert Penello is on the food chain but all of the posts that he's made on NeoGaf make it clear that he knows what's really up even if he won't/can't admit it. The Phils (Spencer and Harrison) can stay but I think Marc Whitten really needs to ask himself if he wants to remain where he is. The guy that left Value and got hired by Microsoft to work on Windows gaming should be given charge of the Xbox division as well.
 

gofreak

GAF's Bob Woodward
Reading around it seems like the threat of a fight with ValueAct was actually what motivated Ballmer to step aside.

Microsoft was also, already, considering giving ValueAct a board seat.

I guess the question is if this will placate ValueAct or will they continue to pursue a board seat.
 
Selling the Xbox division does not mean everyone out of a job and the Xbox no longer available. There's another Washington company that already is planning to launch a console and could snap them up.

While I know you're talking about Amazon, I think it'd be an interesting scenario if Valve (also based in Seattle) were to buy the Xbox division. Of course Valve is too small of a company to make such a purchase. They simply don't have the capital.

But I don't think Amazon would be interested in buying the Xbox division.
 
People usually don't realize how much they had to pump into the whole console biz..
Microsoft may sound (and be) a big name, ut... How long ago did you read of anything revolutionary being engineered INSIDE Microsoft as far as hardware is concerned? Yeah, that's the lacking they had to gradually fill...
They are a grand it firm, but in the latest 10 years their main hardware involvment was just Xbox, thus they had to hire a LOT of personnel..
Plus they were the nonamer, so they had to under price themselves, despite being out of the gc/ps2/xbox the most expensive to produce (and iirc they were like the last to sensibly reduce the product iron cost in that generation)...
Add that a LOT of stuff didn't exactly went their way this gen.. Kinect (or move) didn't go bazinga, zune underperformed and the promised integration with the live ecosystem for music and whatnot went puffff..
Plus... Windows 8 from investors view point is a hole in their wallet much bigger than vista was at comparative Times...
And the xboned presentation fiasco that made them di a 180?
Little surprise some shareholder are starting to raise their voices, but un less they manage to reach a higher % Doubt it will be' more than complaints....
 
Oh please oh please proxy fight please it will be so delicious oh pleasee

OMG lol at the person who said xbl is a license to print money. Wasn't there that survey that just came out that said it made ms like 5 billion over 10 years? That is a hilarious pimple on ms' ass.

Those letters to shareholders can get seriously entertaining. Carl Icahn has been sending bitchy letters to Dell for the last two months.
 

Joni

Member
I guess the question is if this will placate ValueAct or will they continue to pursue a board seat.
THey will. They placed 1/5 of their capital in Microsoft, it is their biggest investment ever. They'll want actual control in return for that.
 

graywolf323

Member
I think we're a couple of steps away from this becoming a real debate.

The article was from yesterday, before Ballmer announced his intention to resign. How might this news affect ValueAct's agenda?

Second, the idea that ValueAct might push for a sale of Xbox is speculation by a different analyst - even if, the article says, he is 'well sourced' with regard to ValueAct's intentions.

The original article highlights some dates by which ValueAct would play any cards, so we'll see what happens, but it's not for sure what their intentions are yet.

I wouldn't be surprised if this had something to do with Ballmer deciding it's time to retire soon
 

CoG

Member
The Xbox division would never survive without a huge company to subsidize it. Xbox with Microsoft is Sega.
 
I think we're a couple of steps away from this becoming a real debate.

The article was from yesterday, before Ballmer announced his intention to resign. How might this news affect ValueAct's agenda?

Second, the idea that ValueAct might push for a sale of Xbox is speculation by a different analyst - even if, the article says, he is 'well sourced' with regard to ValueAct's intentions.

The original article highlights some dates by which ValueAct would play any cards, so we'll see what happens, but it's not for sure what their intentions are yet.

Isn't the interesting question the other way around? How did ValueAct's agenda effect Ballmer's decision to resign?
 
T

thepotatoman

Unconfirmed Member
wow, how did the PSone and N64 have a year like 1998? How have they never had a year like that again? Insane. I cant believe the PSone in its prime was more profitable then the PS2.

More proof that 1998 was the best year ever in all of video games.
 

Dongs Macabre

aka Daedalos42
While I know you're talking about Amazon, I think it'd be an interesting scenario if Valve (also based in Seattle) were to buy the Xbox division. Of course Valve is too small of a company to make such a purchase. They simply don't have the capital.

But I don't think Amazon would be interested in buying the Xbox division.

Holy crap, imagine if Valve could buy it.

Steam workshop support, cross-platform digital games.

That would be amazing.
 
This wouldn't necessarily be a bad idea for Microsoft. They need to consolidate and refocus their energies on countering the threats to their main businesses, and the Xbox division is not really going in the same direction as the company.

It's a profitable venture, but I don't think that it helps drive the growth of the other products.
 

gofreak

GAF's Bob Woodward
Isn't the interesting question the other way around? How did ValueAct's agenda effect Ballmer's decision to resign?

Yeah, as I said in my subsequent post, people seem to be crediting ValueAct's agitation with Ballmer's decision to resign.

That might goad them to push for more but we'll see. I'm not sure if they've officially outlined their agenda...if Xbox is on their agenda, and they do get a board seat, then there'll be a real debate to be had here.
 

Cynar

Member
Source?

Holy shit if true. Nintendo completely embarrassed the competition.
Yet investors are complaining about iwata who actually had some foresight (ignoring the Wii u). Most investors only care about short term. Same with politics these days it seems. It kills me that people don't think long term anymore and want results immediately without looking at long-term health.
 

Mpl90

Two copies sold? That's not a bomb guys, stop trolling!!!
According to this article , Gates owns 25 percent, Ballmer owns 4 percent, and Paul Allen owns 2 percent.

So yeah, 1 percent is a big deal.

Wouldn't this mean that ValueAct would "just" need to be joined in his decision by so many major stock holders that, together, represent 26% of the complete stock in order to make relevant decisions?
 

Omikaru

Member
Would Nintendo buy Xbox?
Sony maybe to remove all competition?

No and no.

I'm not sure of the nitty gritty technicalities of it, but any sale of the Xbox division doesn't have to be one specific entity, like a rival company, someone looking to get into games, or whatever (though this is a possibility -- but I doubt Nintendo or Sony want to buy another games division when they already have their own). They could spin it off into its own company (Xbox inc., or some such company) and float it on the stock market, just as News Corporation was recently split into two companies (News Corp, which makes up its less valuable newspaper companies, and 21st Century Fox, which makes up its more profitable media endeavours).

There would have to be organisational changes at Microsoft to make this happen, though, like more autonomy for the Xbox division, before they could consider spinning it off entirely. It would be a long process.
 

Tripon

Member
wow, how did the PSone and N64 have a year like 1998? How have they never had a year like that again? Insane. I cant believe the PSone in its prime was more profitable then the PS2.

Pokemon Red and Blue came out in 1998 in NA and EU regions. That's where most of Nintendo's profits lie.
 
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