Online Advertising Takes a Dive in Microsoft Third Quarter Earnings

Microsoft released their quarterly earnings today, reporting a loss for the company – the first time in 23 years. Online advertising contributed to the losses, although the division is the smallest of all Microsoft’s big five divisions (the other four being Client, Business, Server and Tools, and Entertainment/Devices).

The Online Services Division more than doubled their operating income, but that did not translate into revenues. The division saw $721 million in revenues for their third quarter of 2009, compared to $843 million in the third quarter of 2008. That’s a 14.5% decline.

Microsoft says lower display advertising prices are the reason for declining online advertising revenue. Page views and search queries are growing, however, giving a silver lining to the news. Also, remember that Microsoft has done some pretty hefty hiring in the search department, including hiring quite a few tech execs from Yahoo! With many of these hirings occurring in the past two quarters, it may not have been enough time to see what’s to come from any new initiatives that are in the works.

Overall, Microsoft saw $13.65 billion in revenues in Q3 2009 compared to $14.45 billion in Q3 2008, a 6.1% decrease.

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