{"id":541495,"date":"2010-04-22T17:04:00","date_gmt":"2010-04-22T21:04:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/henry-blodget-microsofts-bingmsn-results-truly-horrifying-quarterly-loss-balloons-to-713-million-2010-4"},"modified":"2010-04-22T17:04:00","modified_gmt":"2010-04-22T21:04:00","slug":"microsofts-bingmsn-results-truly-horrifying-loss-rate-balloons-to-3-billion-a-year","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/541495","title":{"rendered":"Microsoft’s Bing\/MSN Results Truly Horrifying — Loss Rate Balloons To ~$3 Billion A Year"},"content":{"rendered":"

Microsoft’s online services division revenue increased modestly year over year, rising to $566 million.  That’s about a $2.2 billion run-rate.  And that’s the good news.<\/p>\n

Microsoft’s online services division losses exploded to $713 million, up from $411 million a year ago.  That’s almost a $3 billion loss run-rate.<\/p>\n

Some of the increase in losses resulted from “transition costs” associated with the Yahoo deal, so we’ll assume they are one-time.  Most of the rest of the increased losses appear to be normal operating expenses:<\/p>\n

OSD revenue increased primarily as a result of increased online advertising revenue, offset in part by decreased Access revenue. Online advertising revenue increased $81 million or 19%, to $502 million, reflecting an increase in search and display advertising revenue, offset in part by decreased advertiser and publisher tools revenue. Access revenue decreased $14 million or 33%, reflecting continued migration of subscribers to broadband or other competitively-priced service providers. <\/span><\/p>\n

OSD revenue for the three months ended March 31, 2010 included a favorable foreign currency exchange impact of $13 million. <\/span><\/p>\n

OSD operating loss increased due to increased operating expenses,<\/strong> offset in part by increased revenue. General and administrative expenses increased $154 million due mainly to transition expenses associated with the inception of the Yahoo! Commercial Agreement. Research and development expenses increased $74 million or 33%, primarily due to increased headcount-related expenses and reimbursement to Yahoo for certain of their costs incurred prior to migration to the Microsoft platform. Sales and marketing expenses increased $69 million or 30% due to increased marketing activities. Cost of revenue increased $64 million or 15%, primarily driven by higher online traffic acquisition costs. <\/span><\/p>\n

It’s hard to describe how awful this business looks in isolation.  We’re talking about a business with plenty of scale–more than $2 billion of revenue–that is still losing more than it generates in revenue.  <\/em>This in an industry sector in which even the WORST competitor, AOL, is still making plenty of money.
<\/span><\/p>\n

If this business weren’t hidden within the belly of a monstrous cash-generation engine (Windows\/Office)<\/a>, shareholders would have long since have revolted and shut it down.<\/span><\/p>\n

Here’s a chart of all the money Microsoft has lost for the past four years.  This quarter’s loss, which is not yet reflected, will almost set a new quarterly record again.
<\/span><\/p>\n

\"chart
<\/span><\/p>\n

Join the conversation about this story »<\/a><\/p>\n

See Also:<\/b><\/p>\n