Microsoft Q2 Earnings: High, but Probably Not Because of Search
Thursday, July 19th, 2007;
-- Jordan McCollum |
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 Earth™ 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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July 19th, 2007 at 9:04 pm
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.
July 19th, 2007 at 10:20 pm
Sorry, my numbers are wrong. I misundertood part of the earnings statement, and part of your post. Whoops.
July 19th, 2007 at 10:30 pm
[...] Jordan McCollum, Harrison Hoffman and Mary Jo Foley are talking about Microsoft’s earnings report, especially the new numbers for the Online Services Business (OSB). The OSB grew significantly in size, but had a larger operating loss than a year earlier. For fiscal 2007 (July 2006-June 2007), revenues were $2,474 million, up $175 million from fiscal 2006. The operating loss, however, rose from $74 million in fiscal 2006 to a much higher $732 million in fiscal 2007, thanks to $3,206 million in expenses. [...]
July 23rd, 2007 at 10:15 am
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…
November 28th, 2007 at 9:02 am
[...] Jordan McCollum, Harrison Hoffman and Mary Jo Foley are talking about Microsoft’s earnings report, especially the new numbers for the Online Services Business (OSB). [...]