How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 511.36

+0.5%

Nov 12 3:59 PM EST

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To: kvkkc1 who wrote (71376)	7/19/2002 1:10:12 PM
From: David Howe	Read Replies (3) of 74651

We've been through that before, although nobody knows the exact numbers. Let's just say that they make "software" type margins on the games that they sell and they make a solid royalty on partnered games (10% - 20%). If they've sold 3.9 million Xbox and the attach rate is at 4.2 games per box then they've sold more than 16 million games. If profits average $10 per game than they've rung up $160 million in profits. Not nearly enough to counter the loss per Xbox sold, but a decent start. When Xbox is out in the market in much larger numbers there will be more games sold compared to Xbox sold (per year) and the game profits will outweigh the Xbox costs. That's what MSFT thinks at least. Plus, they fend off a PC competitor (Sony) at the same time. The market is only looking at the short term impact of xbox (losses). None of MSFT's long term plans are factored into the current stock price. IMO, Dave

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