Inside Microsoft's (NASDAQ:MSFT) announcement about its successful quarter were the number for its small online division. Revenue at the operation grew 11% to $623 million. And, it produced a $200 million operating loss. With Microsoft's share of the search market sitting at about 10%, the failure should not be surprising.
The only comfort that Microsoft can take is that its growth rate online was slightly better than Yahoo!'s (NASDAQ:YHOO) which only moved up 7% in the first quarter. But, Yahoo! did have revenue of $1.672 billion, and operating income of $169 million.
Microsoft's figures are too laughable to compare to Google's (NASDAQ:GOOG).
The world's largest software company's CFO said that in light of Microsoft's steady investment in online services, its growth in the online area is strong. "It's a long game and we are going to have to invest ahead of a three to five year strategy" . But, his comment on the conference call has not been supported by the company's activity. It has not significantly upgraded its search technology as Yahoo! has. MSN is not an appreciably different portal than Yahoo! of AOL.
Perhaps money solves all problems. Microsoft has billion of dollars that it could throw at trying to capture more of the search and portal business. But, it would take at least billions to make a dent.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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