By on April 23, 2010

Microsoft Sees “Strong Growth” in an Extra $300M Loss for Bing???

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Back when I was a VP at a publicly-traded search marketing firm, I learned one thing: I would never make a good CFO.

It’s not that I can’t use a calculator, I just get soooo bored looking at cash flow statements, P&Ls, etc. We’d have our auditor in for meetings and I’d do my best to be busy “optimizing an important client’s web site!” ;-)

But, I’m not completely ignorant, so I’m sorry Microsoft, you can’t pull the wool over my eyes. You may say (emphasis added),

“Windows 7 continues to be a growth engine, but we also saw strong growth in other areas like Bing search, Xbox LIVE and our emerging cloud services,”

according to Peter Klein, chief financial officer at Microsoft. But when I look at your numbers, I can’t help but see this:

Now, last time I checked, a loss of $713 million was worse than $411 million.

Now, there could be a bunch of reasons for this discrepency. Maybe Bing did well, but other “online services” sucked wind. Perhaps the “strong growth” was the few points of market share that Bing picked up since launch.

What I do know is that the numbers don’t lie: Microsoft continues to struggle with its online services division.


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4 comments on “Microsoft Sees “Strong Growth” in an Extra $300M Loss for Bing???”

  1. Richard Posey Says:

    April 23rd, 2010 at 10:43 am

    I’m not an accountant, either, but I know what’s reflected in a summary statement like that isn’t necessarily true of the reality behind it. Even if an activity is growing significantly, the money spent to nurture that growth for the long run often puts the earnings in the negative. Obviously, you want things in the black, but it’s hard to assume when, on a timeline, a business is trying to make that actually happen.

    Just my thoughts.

    Andy Beal Reply:
    April 23rd, 2010 at 10:50 am

    And that’s a valid point. Money invested into the growth of a division, will show as a cost on the bottom line. Still, that doesn’t mean that Microsoft will see an ROI on that investment, so it’s a loss until it’s not. ;-)

  2. Justin Britt Says:

    April 23rd, 2010 at 5:04 pm

    I’d guess there strongest growth would be from XBOX Live as they continue with great video game releases. But there’s not doubt if they just cut their online server division and corporate-level activity (what’s that) they’d be doing a lot better.

    Another thing to take into consideration is that it’s good to show some losses in certain divisions of the company for tax purposes.

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