Interested in learning what's next for the gaming industry? Join gaming executives to discuss emerging parts of the industry this October at GamesBeat Summit Next. Register today.

Earnings calls are a little like campaign stump speeches these days. Microsoft Chief Financial Officer Chris Liddell used his company’s quarterly earnings call to rattle sabers with Yahoo again. Microsoft to Jerry Yang, in brief: Whaddaya mean, you’re worth more than what we offered?

He didn’t call Yang any names. But Liddell said that it was “clear that speed is of the essence in the deal. Unfortunately, the transaction has been anything but speedy given the unrealistic expectations of valuation” by Yahoo’s board. He reiterated that Microsoft’s $31 a share — or $44.6 billion — offer represents a significant premium on Yahoo’s current $27.30 a share stock price and that Yahoo’s financial condition continues to decline. (Although Yahoo beat expectations earlier this week.) He said Microsoft would consider its options if Yahoo doesn’t respond by Microsoft’s stated deadline this weekend.

“[Microsoft] will remain disciplined about the offer,” and will not increase the price just because it can afford to, he said.


GamesBeat Summit Next 2022

Join gaming leaders live this October 25-26 in San Francisco to examine the next big opportunities within the gaming industry.

Register Here

Meanwhile, Microsoft reported third fiscal quarter earnings Thursday that slightly beat expectations on earnings but fell short in revenue, prompting a small sell-off (down 4 percent) in after-hours trading.

Earnings were $4.41 billion, down from $4.9 billion a year earlier. Revenues were $14.45 billion, up slightly from $14.39 billion a year ago. Liddell said in the conference call that Entertainment & Devices, which includes the Zune and Xbox 360 businesses, contributed positively to results.

“Our businesses remain robust in spite of the uncertainty” in the information technology markets because of the current economic environment, Liddell said.

He said he assumes the current economic environment — slow in the United States, healthy worldwide — to persist for the rest of the year.

A few tidbits stood out to me. PC sales growth slowed during the quarter, but international sales made up for that slowness. The growth rate of PC unit sales is about 12 percent to 14 percent for the year. It seems clear that Microsoft is losing some ground in market share to Apple, whose growth was better during the quarter.

The company reported that it sold 1.3 million Xbox 360 consoles during the quarter, bringing the cumulative sales to 19 million. The console is well on the way to passing the original Xbox, which sold 24 million consoles from 2001 to 2005. Sales were up $1.6 billion, up 68 percent from a $936 million year ago. Operating income was $89 million, compared with a loss of $324 million a year earlier.

That means the company is on schedule to make the E&D group profitable by the end of the June 30 fiscal year. During the quarter that ends June 30, the company expects E&D revenue to grow 32 percent to 34 percent, thanks to demand for Xbox 360 consoles and games. During the March quarter, Microsoft had a shortage of Xbox 360 consoles. But it noted that in the U.S., shipments had resumed and enabled the company to recover the No. 2 spot from the Sony PlayStation 3. (The Nintendo Wii is number one, of course.) In the second quarter, Take-Two Interactive’s “Grand Theft Auto IV” game is expected to give a good boost to console sales, Liddell said.

The company paid $500 million for Danger during the quarter to jumpstart its mobile devices revenues. Online services is still the company’s biggest money-loser, with a loss of $228 million. It’s still clear why Microsoft needs Yahoo to shore up its online businesses.

GamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.