This is what happens when you put all your eggs in the HIGH end of the phone market hoping that the free wheel spending on GSM phones with providers like Verizon, ATT, and Tmobile will spill over in Microsoft's favor. Reality check, IT DID NOT!!
It took microsoft around double the amount of time they expected it would take to make the XBOX profitable and they nearly dumped that too!
Without more focus on cdma, and the mid to low grade segments of the market, they will not be profitable.