Microsoft Corp, which is trying to compete with Sony Corp in video-game consoles, will try to design the next version of its Xbox machine with cheaper parts because the current model won't ever be profitable.
"With the current cost of goods, there's no way to make money with this generation of the console," chief financial officer John Connors said at a Microsoft investor presentation in Boston.
He didn't say when the company would introduce a new Xbox. Analysts expect the next one in 2005 or 2006.
Microsoft, the world's biggest software maker, had a loss of US$874 million in the division that includes Xbox in the year that ended June 30, 2002, and a US$924 million loss the next year.
At the Xbox's introduction in November 2001, the company refused to forecast when the machines would become profitable.
Analysts have estimated Microsoft loses more than US$100 on each Xbox. Consoles typically reach profitability late in their second year or in their third year on the market, Xbox chief Robbie Bach has said.
Asked by an audience member why the company doesn't cut more jobs to save money, Connors said Microsoft won't start a significant round of firings.
The software maker has cut smaller numbers of jobs in specific businesses in the past and will continue to do that, Connors said.
The company has cut "50, 75 or 200" jobs in some areas, Connors said.
"There are opportunities for improvement, but it's likely to happen with a slow rate of change rather than any large-scale reduction," he said.
Shares of Microsoft, based in Redmond, Washington, fell US$0.55 to US$28.25 as of 4pm New York time in NASDAQ Stock Market composite trading. They have risen 3.2 percent this year after adding 5.9 percent in last year.
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