• PaidContent.org, Friday, July 18, 2008 11:15 AM

PaidContent.org captured some interesting sound bytes from Microsoft's second quarter earnings call. Results, by the way, were poor, especially in online advertising, where organic year-over-year growth fell from 26% in Q1 to 8% in Q2. Silicon Alley Insider's Henry Blodget said this "is also known as hitting a wall," and added that Microsoft's soft display results bode particularly poorly for Yahoo, which delivers second quarter earnings on July 22.

Meanwhile, Microsoft stood by their numbers as being consistent with what the firm told shareholders in April. The company also claimed that factors like market weakness and the uncertainty over a Yahoo deal were all out of its control, and that because of Yahoo's search deal with Google, it was forced to spend more heavily on its online advertising infrastructure and marketing efforts. Despite the shockingly low 8% growth figure, Microsoft claims that ad revenue will grow by 25% in the second half of the year.

Even so, CFO Chris Liddel said there's no avoiding the bad economy. "The one proviso to that is in the online advertising space ... it was weak in the 4th quarter," he said. "There is a direct impact and we're not immune in the online space." In fact, Liddel repeated himself several times throughout the call: "The online advertising area is part of the business that we think is most challenging... the online advertising area is very difficult at the moment." Bad time for a shifting a business model, then.

Read the whole story at PaidContent.org »