Microsoft announced earnings today for the third quarter. Overall revenues for the quarter came in at $15 billion, growing a decent 9 percent annually. But its net profits of $4.37 billion rose only 1.9 percent. As usual, Microsoft’s stability came from is Windows client, server, and Office businesses.
The company’s online revenues, which includes MSN, search and its advertising networks, grew 15 percent to $770 million in the quarter. However, the online business posted an operating loss of $480 million, nearly double the $267 million loss it posted a year ago. On the conference call, Microsoft boasted about its Silverlight partnership with NBC during the Beijing Olympics in which 70 million videos were streamed. You’ve got to wonder how much that partnership ended up costing Microsoft.
Total online advertising revenues were up 15 percent in the quarter, with search growing faster than display. The company expects online revenue growth to slow to 6 to 10 percent next quarter, with display advertising being more sensitive to the recessionary environment.
The company will be taking $400 to $500 million out of costs by slowing its hiring, spending less on data centers, and cutting back on marketing and travel expenses. But Microsoft still has plenty of cash: $21 billion, and that was after buying back $6 billion in stock and paying out $1 billion in dividends during the quarter. To put that $7 billion Microsoft handed back to shareholders into perspective, Yahoo’s entire market cap is now only $17.5 billion.
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Do you all really hate Microsoft that much? MS beat’s expectations, economic outlook is great and you pick on a piece of the business that is less than 10% of it’s total revenues. You maybe right, but is Online services the only thing this great company is all about? What about it’s database, server, games, oh yeah and so many countless businesses? Grow up Eric and Bay Area, MS is doing great!
Uh.. this is a blog about the “Web” dumb ass… Of course they’re going to focus on MS’s online business..
Not to mention that many people, investors included, are paying close attention to their online business unit. It’s essentially the future of the company… the reason why Google makes Microsoft nervous.
For someone who is such a Microsoft fan (is that what you guys call yourself?) you should know that…
“Microsoft fan (is that what you guys call yourself?)”
Fan is the correct term regardless of the entity.
Apple fan, IBM fan, Dell fan, Electric fan.
I’ve got a cunning plan … to increase sales, they should spend a few hundred million on a new ad campaign with Jerry and Bill at the helm.
I appreciate you guys will slag me, but really … this idea could work.
Time to buy YHOO or RIMM?
Their new name is Micro not so soft…lol
The quality of comment and commenter is in steady decline on this site.
Dont know where else you are syndicating, Arrington but I think it is time to invoke comment approval and moderation.
In other news, given Microsoft’s super strong footprint in the online world, I don’t blame Yahoo for not selling–smart business sense be damned or not!
I agree. Comment quality has plummeted. The Calacanis email post is pure proof of that.
Not to mention the quality of articles themselves too! The comments can only be as good as the articles!
maybe all their money is getting sucked up through their ‘live cashback’ program. or do people not use that? they usually give u back 5-15% of your total purchase price, not too shabby
-jack
You get rewared 5% of your total purchase price because the advertiser paid MS more than 5% for that transaction.
It is completely different model than the Pay per Click model which is cheap ad compared to the Pay per Transaction model
“To put that $7 billion Microsoft handed back to shareholders into perspective, Yahoo’s entire market cap is now only $17.5 billion.”
What perspective is that? Comparing a web portal company to a software company?
Google could potentially have the same market cap and cash as Microsoft does now.
Your comment = fail.
At least they beat estimates. What more can you ask for in this market? Come on, it’s not like they have mortgage exposure.
When are they going to open up a version of Adsense or YSM? IF they offered a 90% rev share they might actually get some business and then more paid search business.
Check out http://www.SinglePill.com
I do agree with Christopher Ross and they should do new ad campaign. http://www.oxyshopping.com
if your site is as useful as your comments, give up now
Where’s a moderator when you need one? If you’re going to spam a site, you might as well at least add something that is at least somewhat insightful and original, hah.
Single Pill,
I agree. Google is killing publishers right now by taking a lions share of the their ad revenue.
It’s not going to happen.
MSFT doesn’t care about the little guys… I mean publishers/partners.
I hope I am wrong though:)
No doubt Microsoft will continue to have its Windows, Server business on sound pedestal in times to come. It may have to tweak its online search business model a little bit to get gains from Yahoo’s falling share in that segment.
“To put that $7 billion Microsoft handed back to shareholders into perspective, Yahoo’s entire market cap is now only $17.5 billion”
How could comparing these numbers make any sense? MS is far larger than Yahoo and is active in so many areas while Yahoo is just a web company.
hmm so MS cash reserve is lower than Apples $25B.
nice to see the tides turn
Keep in mind, over the past few years Microsoft has handed well over $100 billion back to its stockholders in buybacks and dividends. It’s not a contest to see who can sit on the biggest pile of cash.
Mayor Goldie Wilson should got back to the future…
Does anyone else think it’s odd that M$ is losing incrementally more and more $ quarter over quarter in their division that is the “future of the company”?
When is this going to end? It’s like they have their own pre bubble dot-com business. Or is this M$ leveraging their cash position to price others out of the market?
Sigh. Erick is Still Sucking Wind.
Beating expectations in this market is chugging along?
When are those TC layoffs coming?
I would be happy with only a million bucks, jeez!!!
Sometimes I wonder why news like these hit the newsman. Only to hit poor souls like us.