Microsoft (MSFT): Halo 3 has big first day

Microsoft (NASDAQ: MSFT) says that its important video game launch for Halo 3 brought in $170 million in the first day that it was available. The Wall Street Journal writes that one analyst believes that the game could help push Xbox 360 sales to 400,000 to 500,000 units in the US this month. In August that number was 277,000.

Does the increased activity help Microsoft much? Not really.

According to the company's 10K, the Microsoft game division lost $1.9 billion last year. Revenue was $6.1 billion. Even if Halo 3 sales bring the segment of the world's largest software company to a break-even, the unit is a small part of the company's $51 billion in sales and nearly $19 billion in operating income.

Microsoft's game operation will continue to be dogged by the popularity of Nintendo Wii and competition from the Sony (NYSE: SNE) PS3. That will keep pressure on the price of the Xbox game console itself. So, the company's sales of Halo 3 and other games will have to be extraordinary to make any financial difference to the company.

For Microsoft, the Halo 3 news is good PR, but it does very little to convince Wall Street that it is worth management's time to fiddle around with such a relatively small and money-losing business.

Douglas A. McIntyre is a partner at 24/7 Wall St.