Microsoft’s Xbox 360 revenues grow but profits dip in holiday quarter

Microsoft reported a solid performance for its video game business in the most recent quarter. The growth was possible because the Xbox 360 is enjoying huge popularity in the U.S. market, where both Sony and Nintendo have been weak in the past year.

In its second fiscal quarter ended Dec. 31, Microsoft’s Entertainment & Devices division posted revenue of $4.24 billion, up 15 percent from $3.69 billion a year ago.

Microsoft’s revenue in Entertainment & Devices was $6.19 billion for the six months ended Dec. 31, up from $5.49 billion a year earlier.

Microsoft’s operating profit in the second fiscal quarter was $528 million, down from $666 million a year ago. For the six months ended Dec. 31, operating income was $877 million, down from $1.05 billion a year earlier.

As noted by chief executive Steve Ballmer at the Consumer Electronics Show, Microsoft has now sold 66 million Xbox 360 game consoles and 18 million Kinect motion sensors. Xbox Live now has 40 million members.

In a conference call with analysts, Microsoft said that Xbox 360 demand was strong during the holidays and was driven by interest in the Kinect motion-sensing system. Overall entertainment sales were so strong that Microsoft was able to beat expectations for overall earnings.

Microsoft said 200 million people used Skype during the quarter, with 300 billion minutes spent with the calling service.

Third-party research said Xbox 360 had 46 percent of U.S. console sales in December and was the No. 1 console in 2011.

Microsoft sold 8.2 million consoles in the fourth quarter. Xbox Live members are up 33 percent over a year ago.

“We feel really good about our console business,” said Peter Klein, chief financial officer at Microsoft, in the conference call.