MSN revenue flat in third quarter

MSN’s revenue growth was less than one percent in the third quarter (Q1 in Microsoft’s fiscal year). Clearly the company is not making as much money on advertising as Google.

According to The Register : “Wall St analysts, clearly wowed by Google’s ballooning business model, quizzed Microsoft over why MSN’s revenue is projected to be flat or grow by two per cent this year, when Google and Yahoo! have seen growth of between sixteen and six percent. The projection came as Microsoft announced MSN saw revenue growth of less than one per cent to $564m for the three months to September 30 while income grew close to 4 per cent to $83m.”

“Its not a volume issue,” said Chris Liddel, Microsoft’s chief financial officer. “Our market share remains where it was. It’s a monetization issue. That’s something we are going to have to address in future.”

Overall, Microsoft exceeded analyst’ expectations by reporting a third-quarter profit growth of 24 percent.

The New York Times [free sub] reports : “Microsoft, the world’s largest software publisher, said Thursday that quarterly revenue was $9.74 billion, 6 percent higher than $9.19 billion in the quarter last year. Earnings rose 24 percent, to $3.14 billion, or 29 cents a share, from $2.53 billion, or 23 cents a share, a year earlier.”

Chris Lidell said its most robust sector continued to be its server and tools business aimed at corporate customers, which grew 12.8 percent in the quarter. Desktop Windows increased by 7 percent. Taking the Office business into account, the three core businesses grew by an average of 8 percent in the quarter. “Over all, it was a good quarter. There is clearly a big product pipeline coming up.”

He pointed to the xBox 360 game player and to the new version of the SQL Server database program and the Visual Studio software development system, available in November, as well as the desktop operating system, Windows Vista and Office 12, which will be available next year. The company said it expected to sell 4.5 million to 5.5 million xBox game consoles in the first year.