Investment Firm Of Microsoft Co-Founder Wants To “Get Rid Of” Xbox Division

Vulcan Capital — the private investment firm of Microsoft co-founder Paul Allen — has added its voice to the growing chorus of shareholders who are unhappy with the company’s Xbox business, by publicly suggested that the division should be spun-off.

The comments about Microsoft’s least profitable division came during the recent Financial Times Investment Management Summit in New York, where Paul Ghaffari (the chief investment officer of Paul Allen’s Vulcan Capital) stated the following:

“The search business and even Xbox, which has been a very successful product, are detracting from that. We would want them to focus on their best competencies,”

“My view is there are some parts of that operation they should probably spin out, get rid of, to focus on the enterprise and focus on the cloud.”

While Paul Allen’s $2 billion stake in Microsoft is far short of what would be needed for him to single-handedly force the company to dump its Xbox business, the statement should not be taken lightly. Not only is the Entertainment and Devices Division about to take a potential hit from the launch of the Xbox One, but they will also soon be facing a new (and possibly unfriendly) CEO to replace the outgoing Steve Ballmer. As if that wasn’t enough, the EDD also has to worry about the activist investor group ValueAct, who has an anti-Xbox agenda and a new seat on the company’s board of directors.

Nothing is written in stone at this point, but the Xbox division certainly seems to have a rather large number of powerful internal opponents lined up against it. Hardly the position that anyone would want to find themselves in on the eve of a major hardware launch.