Microsoft on Thursday lowered sales forecasts for its Xbox video game console, blaming weak sales in Japan and a slow start in Europe. John Connors, chief financial officer for Microsoft, said in a conference call after the company's announcement of third-quarter earnings that Microsoft now expects to sell 3.5 million to 4 million units for its 2002 fiscal year, which ends June 30. Previous forecasts called for sales of 4.5 million to 6 million units during the period.

Financial analysts had expressed mounting doubts in recent weeks about Microsoft's ability to meet the sales targets, as the game machine found modest acceptance overseas. Sales in Japan, where the Xbox went on sale in February, have been miniscule, with research firms in the country reporting sales of a few thousand units a week in recent weeks.

Sales in Europe, where the console arrived last month, have also been tepid, due partly to a selling price considerably above the Xbox's main competition, Sony's PlayStation 2. Microsoft responded by announcing a price cut of almost 40 percent early Thursday for the European Xbox. The console will now sell for for $266 in mainland Europe and $288 in Britain, compared with initial price tags of $419 and $434.