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Media

Goldman Sachs Lowers Microsoft Estimates on Xbox Issues (MSFT)

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By Douglas A. McIntyre Published
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In a new research note this morning, Goldman Sachs has reacted to the negative news on the recall and warranty charges on Microsoft’s (MSFT-NASDAQ) Xbox 360.  This is after the company announced it would have a $1.05 to $1.15 Billion charge and if you do the math on the costs this could come out to half of the units that have already been sold.  Supposedly this is not a design issue and is not affecting the currently built machines.  Goldman Sachs has lowered FY2007 EPS to $1.41 from $1.49 and lowered FY2008 EPS from $1.70 to $1.69,although it has maintained the 2009 estimates.  Microsoft was maintained as Buy at Goldman.

In a separate note, D.A. Davidson maintained a neutral rating on Microsoft, and trimmed FY2007 EPS to $1.49 from $1.50.

Based on the differences of the timings, it looks like the differences from firm to firm are going to be in the timing of the charges.

Jon C. Ogg
July 6, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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