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Microsoft Q2 Earnings: High, but Probably Not Because of Search




Microsoft also posted their second quarter earnings today, reminding us all that just because Live Search isn’t doing so hot, that doesn’t mean their bottom line suffers. While Google and Yahoo have some income coming from sources other than search advertising, Microsoft’s $13.37 billion in revenue (up 13% YOY) comes from their non-search businesses. You know, the computer stuff. This brings their total revenue for the 2006/2007 fiscal year to over $51 billion dollars.

While this only represents a 17% increase YOY, it’s not a bad situation to be in. Besides the fact that 17% to them is $7.43 billion dollars, Microsoft had settlements with their Xbox as well as the $6 billion aQuantive deal to pay off—and now, with plenty of room to spare.

Microsoft’s earnings report mentions that the division that oversees search (Online Services Business or OSB) had several accomplishments this year:

In fiscal year 2007, we launched Windows Live Search and Live.com in 54 international markets, Live Local Search in the U.S. and U.K., beta versions of MSN Soapbox (our expansion of the MSN Video experience), Virtual Earthâ„¢ 3D, Windows Live Hotmail, and other offerings.

As far as earnings go, the OSB’s revenue increased 19% to $688 million in Q2, but was far outpaced by their operating loss—$239 million this year, up 28% from $189 million in Q2 last year. The year-over-year data fares even worse: revenue grew only 8%, while operating loss increased one hundred fold from $74 million to $732 million. Losses were largely due to increased costs of labor, content and hardware, according to the release.

On the bright side, that means there’s plenty of room to grow…

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  • http://microsoft.blognewschannel.com Nathan Weinberg

    You list two seperate numbers for operating loss for OSB. Actually, the loss is the first number; the second is the cost of revenue. The operating loss is the result of the cost of revenue, $732 million, being higher than the revenue, by $239 million.

  • http://microsoft.blognewschannel.com Nathan Weinberg

    Sorry, my numbers are wrong. I misundertood part of the earnings statement, and part of your post. Whoops.

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  • http://www.study-habits.com/study-guide.html Study Guide

    Microsoft needs to do something on the Search Arena to force Google to it’s knees. It’s a shame that they still haven’t taken the issue serious enough…

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  • http://www.facebook.com/pages/YouGov-Surveys/28215144078 YouGov

    Microsoft really do not feature in the search market, they have still not learnt from google that less clutter is so much more!