Despite a 18% drop in earnings and a 14% drop in revenue in Q3, Microsoft still beat Wall Street estimates for its earnings per share by 25% (eight cents).
Naturally Microsoft’s revenue reports cover their bottom line, which includes all of their software, hardware, gaming and other offerings, not just their search engine. Bing falls under their Online Services Division. Last year, that division posted an operating loss of $321M in Q3; this year it’s down to a $480M loss.
A large part of that loss may come from the $100M marketing blitz to promote Bing—or that cost might have been listed in Q2 of this year.
In the earnings call, executives said online advertising earnings were down by 3%. Although they’ve seen growth in page views, the lowered ad-rates are still hurting them in the display arena. However, they believe ad rates have stabilized and expect ad rates to turn around gradually next year. Meanwhile, the WSJ reports from the call, “U.S. search revenue up in mid-single digits.”
Microsoft lowered its headcount 4% YOY (the largest reduction in its history).
What do you think? Are ad rates ready to turn around?