Is the Microsoft Internet Business Flailing in the Information Flood?
May 12, 2011
Microsoft took a long shot. The company bet $8.5 billion that Skype, a voice over Internet protocol leader, that Microsoft will be a big player in the next generation Web.
As appears to always be the case, numbers don’t lie but executives do. Microsoft’s online services division claimed growth in an earnings release recently but… as explained in Microsoft’s Internet Business Continues to Hemorrhage ,”Microsoft lost $726 million in the Online Services Division for the quarter. It was actually their worst quarter in two years in that regard. And it was their second worst ever, as Business Insider points out in their nifty chart perfect for showing such bloodbaths. And despite the year over year revenue growth, the income was actually down year over year. As in, they managed to lose more money despite bringing in more… And how’s this for a kick in the pants: if Microsoft had just scrapped their Online Services Division for the quarter, they likely would have beaten Apple in terms of profits once again. Instead, they’re over $700 million behind — behind, mind you, for the first time in a couple decades.
Of course, Microsoft can’t afford to scrap the Online Services Division (well, figuratively afford it, at least). Like every technology company, they know this is the key to the future. And that’s precisely why they’re dumping so much money into it.”
It isn’t all bad for Microsoft, though, as their Windows and Office businesses appear to be holding their own. But for how long? The competition is stiff and if Microsoft doesn’t make some changes, it won’t be pretty. Our expert Michael Onghai believes Microsoft is a value stock but it remains to be seen if there’s any saving grace outside of Office and any other bright spot they might claim. Have the glory day of MSFT passed ? It remains to be seen. And what about search? This core function seems to have slipped low in the priorities stack. What’s $1.2 billion for Fast Search & Transfer when compared to $8.5 billion for Skype?
Alice Wasielewski, May 12, 2011
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