MSN Revenues Decline Slightly; Investments Continue

  |  July 21, 2006   |  Comments

The company plans to put $500 million into online services, including ad-supported businesses, over the next fiscal year.

Revenues at Microsoft's MSN declined 3 percent year-over-year, coming in at $580 million, as compared to $598 million during the same period last year. The company revealed results and plans for MSN when it announced earnings for its fiscal fourth quarter of 2006 yesterday.

This quarter's earnings report comes as Microsoft pumps dollars into its MSN, Live.com and other ad-supported businesses, hoping to benefit from the boom in online advertising.

In the most recent quarter, growth in the advertising portion of the MSN business was flat, according to the company, while the access business, unsurprisingly, declined 13 percent. While Microsoft executives didn't break out display advertising revenue, CFO Chris Liddell said expansion was in line with growth in the industry as a whole.

As for search, the company indicated that it has been making progress in transitioning its sponsored listings to home grown ads. Previously, Yahoo Search Marketing had syndicated its ads on MSN. The company said that all U.S. search ads are now served by MSN adCenter. The system is also fully up and running in France and Singapore, where the product received early trials. A roll-out in the United Kingdom is planned for August.

"It's not far off that we're going to have 100 percent of our business on adCenter," said Liddell on a conference call with investors. "Clearly, it's in our line of sight."

In keeping with those plans, Microsoft plans to spend $500 million in developing its online services business, which includes MSN, Search, adCenter, Live.com, Office Live and CRM Live, in the coming fiscal year. Some of those dollars will go into creating and acquiring content to drive display advertising. The company will also work to develop its search and advertising platforms, Liddell said.

"We do not expect MSN to be profitable in this fiscal year [2007]," Liddell added. "We see for MSN that fiscal year '07 will be an investment year."

Overall, Microsoft reported fourth quarter revenue of $11.8 billion, a 16 percent increase over the same period last year. Net income for the fiscal fourth quarter was $2.38 billion, or $0.28 per share. The net income figure represents a 24 percent drop over the same period a year ago, when earnings were $3.7 billion, or $0.34 per share.

The company also announced a $20 billion stock repurchase, to be completed August 16, 2006. Additionally, Microsoft's board of directors authorized a second $20 billion for an ongoing share repurchase program.

ClickZ Live Chicago Join the Industry's Leading eCommerce & Direct Marketing Experts in Chicago
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 4 days and 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda and register by Friday, August 29 to take advantage of Super Saver Rates!

ABOUT THE AUTHOR

Pamela Parker

Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

Featured White Papers

BigDoor: The Marketers Guide to Customer Loyalty

The Marketer's Guide to Customer Loyalty
Customer loyalty is imperative to success, but fostering and maintaining loyalty takes a lot of work. This guide is here to help marketers build, execute, and maintain a successful loyalty initiative.

Marin Software: The Multiplier Effect of Integrating Search & Social Advertising

The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.

Jobs

    • Systems Analyst/Support
      Systems Analyst/Support (Agora Inc. ) - BaltimoreIRIS (Increased Revenue Intuitive Software ) is proprietary software that helps marketers...
    • Client Services Support Specialist
      Client Services Support Specialist (Agora Inc. ) - Delray Beach OVERVIEW:  This position requires a highly motivated and resourceful individual...
    • Creative Marketing Associate
      Creative Marketing Associate (NewMarket Health ) - BaltimoreAre you looking for a foot in the door with the best marketing company in the business...