More specific details have been revealed on the exact dismal situation which Microsoft has reported for the year ended June 30th. Losses for the Entertainment division increased by 47 percent due largely to a $1.06 billion charge as a result of the extension of the Xbox 360 warranty. Further to this MS shipped just 700k consoles during the quarter compared to 1.8 million for the same period last year.

Losses for the Entertainment and Devices Division (EDD) increased by 47 percent for the year ended June 30, due primarily to a $1.06 billion charge stemming from the extension of the Xbox 360 hardware warranty.

Microsoft said reduced console manufacturing costs partially offset the charges caused by the upgraded warranty.

Annual revenues for the EDD (which includes the media player Zune, TV platform products and mobile embedded devices) increased by 28 percent to $6.08 billion, driven by Xbox 360 hardware, accessories, software and Zune sales.

The fourth quarter in the EDD was down, with operating losses increasing 183 percent to $1.2 billion, again due to the billion-dollar-plus warranty charge. Revenues dropped 10 percent from a year ago to $1.16 billion due specifically to "decreased Xbox 360 console sales."

Microsoft shipped 700,000 consoles during the quarter compared to 1.8 million for the same period a year prior.