MSN Continues To Surprise
And not in a good way. This from the Journal’s wrap of their quarterly results:
“In addition to the increased Xbox 360 costs, the quarter also showed strain of competition with Google Inc.: Revenue at the MSN online unit fell to $561 million from $581 million. The unit suffered an operating loss of $26 million, compared with a $102 million profit.”
But that includes the dial-up business which is falling gracefully while still deliving profits. So what about a fair indicator of progress on the advertising front?
This from the 10-Q:
“Advertising revenue increased $25 million or 7% in the third quarter and $125 million or 13% in the nine months ended March 31, 2006 due primarily to growth in display advertising for portals, channels, email, and messaging services, which was partially offset by a decline in both periods in search revenue due to the ramp up of adCenter. ”
A decline in search revenue. Now sure there is truth to the introduction of adCenter in putting some pressure on pricing but given that they have been operating in limited betas with a very small subset of advertisers and Yahoo’s revenue (who represented MSN over the last quarter) wasn’t impacted that dramatically (i.e. it still served a meaningful amount of ads on MSN), this smells fishy.
No wonder they have been re-shuffling the management chairs (and probably throwing a few as well).
