Microsoft Online Ad Revenues Up

Microsoft's third-quarter earnings came to $3.14 billion, or 29 cents per share--up from $2.53 billion, or 23 cents per share, last year, the company reported Thursday. The MSN division posted a 4 percent gain in operating income in the third quarter, to $83 million from $80 million last year.

MSN's increase was fueled largely by a $60 million, or 20 percent, increase in online ad revenue. That jump, however, was offset by a decline in Internet access revenues, as users turned away from MSN as an Internet service provider and moved toward broadband and other ISPs. That sector of MSN's business declined by $62 million, or 30 percent, from the third quarter of last year.

Microsoft said in its stock filing that it expects to see increased online ad revenue in the coming quarters due to an improved ad platform and the rollout of its paid search service, MSN adCenter. The filing noted, however, that the growth of its paid search service is being somewhat slowed by downward price pressure on keyword ads.



The company also disclosed that it paid $18 million for Voice over Internet Protocol firm Teleo, Inc., which it acquired in September.

Microsoft also released information regarding a settlement in an antitrust case with RealNetworks, producers of the RealPlayer video and audio playing software, over the streaming media features in Windows and other Microsoft properties. Microsoft has paid RealNetworks $460 million, and is scheduled to pay $301 million more over the next 18 months. Microsoft may earn credits to the second payment for subscribers to RealNetwork's music services directed from MSN.

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