Sales of Microsoft's Xbox 360 video game console have plunged more than 60 per cent after the company admitted flaws in the product.

In its sales figures Microsoft said it shipped 700,000 Xbox 360 units during the period, compared to 1.8 million in the fiscal fourth quarter of 2006.

Microsoft's Xbox operations are housed within the company's Entertainment and Devices Division made an operating loss of $1.20 billion. The group lost $423 million the previous year.

Much of the lost is because of the $1.06 billion Microsoft is going to have to spend to fix the Xbox 360 to three years.

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