• ClickZ, Friday, April 27, 2007 10:34 AM

It was the usual story in the online ad department for Microsoft Corp. during the first three months of the year: Modest growth compared to the company's core software business. Revenue from Online Services, which includes Live Search, Web portal MSN, and its ad management system, adCenter, grew 11% from a year ago, while overall revenue growth was nearly triple that, at 32%. The online division's increases came at the expense of a $200 million operating loss--considerably higher than last year's loss of $24 million. This was due to increased investment in the division.

On a more positive note, company CFO Chris Liddell said the adCenter was delivering ahead of expectations, boosting overall ad growth to 23% year-over-year. "We are now monetizing more effectively in the U.S. on our own adCenter platform than we had under third-party Overture at this time last year," Liddell said during Microsoft's earning's call. He added that display growth was also in line with the rest of the market, driven mostly by a 4% increase in traffic to MSN's sites.

As Online Services continues to be a work in progress, the introduction of Windows Vista had an immediate impact on the company's bottom line. Microsoft's $14.4 billion quarterly revenue translated into a record profit of $4.93 billion for the Redmond, Wash. giant.

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