How Long Can Microsoft Hemmorhage Money Online?

By  |  Friday, January 28, 2011 at 12:03 pm

While overall Microsoft seems to be doing quite well, there is a sector of its business that continually drags on its bottom line. The company has pushed heavily to promote its online businesses–including Windows Live services, Bing, and more– but so far, it’s not succeeding at making money on the Web.

As pointed out by Silicon Alley Insider yesterday, Microsoft lost a staggering $543 million in its online division in the last calendar quarter of 2010, and its online losses for the year were nearly $2.5 billion. They’re astounding figures.

Microsoft has been unable to make any money in online since the fourth quarter of 2005. That’s 20 straight quarters of losses. In most business circles, I’d think you’d consider that a failed business. In five of those quarters (including five of the last seven), the losses have come in at more than a half-billion.

One of shareholders’ biggest complaints against Microsoft is the fact that the company’s stock price is so stagnant, and essentially has not traded more than $10 above or below its current stock price in the past decade. How long will investors wait for Microsoft to improve its stock-market performance, when other companies like Apple and Google have run circles around it when it comes to stock performance?


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8 Comments For This Post

  1. spet67 Says:

    Your points are valid. No question about that.

    But, it doesn't seem to me like they've got any good options at this point.

    They obviously don't know how to run a successful portal. But, they've put so much into it that to cut it loose, downsize it or shut it down would be a big embarrassment.

    Purchasing another portal would be a possibility, But, would you really want to take over Yahoo or AOL at this point? And, of course, Google is too strong to take over their (sorta) portal.

    If you were if MS' s shoes, what would you do?

  2. Paul Says:

    Sell the stock back and declare bankruptcy??? 🙂 Not saying that's a good idea though!

  3. Ed Oswald Says:

    Exactly. Caught in between a rock and a hard place. But I think this data shows quike clearly that Microsoft doesn't really have much business being in the online space. Its strength is in software, that is for sure.

  4. Henry Says:

    Hi, it's neither "hemmorage" (url) or "hemmorhage" (title) but "hemorrhage". Sorry, haven't had my coffee yet 🙂

    Rgrds Henry

  5. Guest Says:

    As long as the Xbox 360 remains their one access to the home entertainment market they will continue to pursue this path. The have always envisioned the 360 as a foothold in this lucrative market, obviously not so lucrative for them, but being at this table has its costs look at Sony. The fact that technology has now seen smart TV and Blueray players which are wifi and app loaded it remains a matter of time before Microsoft abandons this road, leaving many an Xbox 360 fanboy in the lurch.

  6. Drew Says:

    I went to a Harlem Globetrotter's game yesterday, and on the way out, they gave out these very slick programs for the Superbowl. The programs were perhaps 15"x18" and slick high color pages. The only ads (back page, inside cover, center of magazine) were all for Bing.

  7. Stilgar Says:

    I think Xbox Live has been pretty successful for Xbox users. But outside of Windows 7 Mobile, I don't think they have a strategy to bring that outside of the mobile market…well, that and the only people buying Windows 7 phones are all the other Windows Developers I work with 🙂

  8. Kenny Says:

    Microsoft has not and will not make a profit on the XBOX 360, they’ve lost billions. The only thing they have done is took away from other console makers and I suppose they put their name in the ring but as a company making money should be more important than preventing other companies from making money. Microsoft is out of touch, unrealisitc, pompous, and fading from mainstream. I couldn’t be more pleased.