Microsoft losses in its online services, Bing

Bangalore: Though Microsoft posted strong results for the third quarter of the 2010 fiscal year, the software giant continues to suffer heavy losses in its Online Services Division that manages Bing. The losses reached $713 million by March, higher than last year's loss of $411 million, reports TechWorld.

During Microsoft's fiscal third quarter, which ended March 31, the Online Services Division reported a 12 percent increase in revenue, which rose to $566 million on the back of higher advertising revenue. That was not enough to offset a surge in operating expenses during the period. OSD includes Microsoft's online advertising business, the Bing search engine, and its various MSN websites.

In a discussion of OSD's results, Microsoft blamed the increase in operating expenses on several factors. It said sales and general administration expenses increased by $145 million, largely due to "transition expenses" from the search deal struck with Yahoo, which handles some advertising sales for Microsoft while Microsoft provides for Yahoo's websites.

Another source of Microsoft's higher costs was research and development, which increased 33 percent during the fiscal third quarter to $77 million due to higher headcount and payments to Yahoo for expenses incurred before it moved to Microsoft's search platform. Sales and marketing expenses were also higher, up 30 percent to $69 million due to increased promotional activities.