Microsoft Mulls $500m Costs Cull After Online Ad Division Loss

28 October 2008

REDMOND, Washington: Microsoft's online services division, which houses its internet advertising sales unit, posted a loss of $480m (€386m; £311m) in the last quarter. This compares with a loss of $267m in the same period in 2007, and comes despite of an increase in overall revenues. 

Revenues rose by 15% to $770m over the last four months, with growth via the company's MSN Live Search portal outweighing that from its display advertising networks.

While these figures bettered predicted revenues of $718m, Microsoft has still cut the year-end growth forecast for its online service operations to 10%, compared with an uplift of 18% as estimated at the end of the previous quarter. 

The IT giant is also looking to reduce its overall expenditure by $500m next year, with adspend one area predicted to see cutbacks following a $300m investment in its recent "I am a PC" campaign.

Cfo Chris Liddell says the "challenging economic environment" means growth predictions for next year will also be trimmed.

He adds: "What we've done is essentially gone right across the company, every division, and looked for areas where we would like to spend less."

Data sourced from Brand Republic; additional content by WARC staff