Meanwhile, the unit that makes Microsoft'ssoftware closed in on Windows as being the company's most profitable.
In a quarterly report with the SEC filed Friday, Microsoft said it posted operating income of $1.97 billion in the December-ended quarter in its Windows-centered business unit on revenue of $2.44 billion. That was down from income of $2.11 billion and revenue of $2.68 billion in the year-earlier period.
Microsoft's Home and Entertainment segment, which includes the, PC games and the company's TV products, posted an operating loss of $348 million in the quarter on revenue of $1.28 billion. A year earlier it had a loss of $180 million on revenue of $833 million.
The company loses money on each Xbox it sells, with some analysts pegging the shortfall at more than $100 per $199 console, meaning that strong sales for the platform actually increase its losses.
Microsoft's Information Worker segment, which includes the Office suite of programs, posted operating income of $1.88 billion on revenue of $2.41 billion. A year earlier the segment had posted operating income of $1.74 billion on revenue of $2.2 billion.
The only other profitable division in the quarter was Server Platforms, which had operating income of $498 million on revenue of $1.67 billion. That was better than operating income of $402 million and revenue of $1.44 billion a year earlier.
The MSN Internet access segment had a loss of $157 million on revenue of $569 million, compared with a loss of $211 million on revenue of $462 million a year earlier.
Business Solutions, which includes the company's Great Plains software and the recently acquired, lost $93 million on revenue of $139 million, compared with a loss of $41 million on $73 million in revenue a year ago.
The smallest segment in the quarter was CE/Mobility, including the Pocket PC operating system. Revenue was $21 million and the unit had an operating loss of $39 million. Both were improved over the year-earlier period when the unit turned in revenue of $17 million and a loss of $61 million.
The company also said it had repurchased 19.4 million shares in the quarter for $999 million.
In the filing, Microsoft also said that it had guaranteed the repayment of yen-denominated bank loans for an undisclosed entity in which it has an investment. Microsoft said the guarantees, which continue until the loans and interest have been repaid in full, had a maximum amount of $559 million at Dec. 31. It also said it could recover a portion of the guarantees if the entity was liquidated.