Microsoft online ad revenue jumps by $100M in Q4

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Microsoft Corp.'s revenue from search and display advertising spiked by 20%, an increase of $100 million, to $597 million in its fiscal fourth quarter. Online advertising revenue in Microsoft's 2011 fiscal year, which ended June 30, grew by 19% year-over-year to $2.3 billion.

Advertising generated 90% of the $662 million in fourth-quarter revenue for Microsoft's Online Services Division, which includes its Bing search engine, MSN, adCenter and advertiser tools. For the fiscal year, advertising accounted for 92% of the division's $2.5 billion in revenue.

Search primarily drove the growth in online ad revenue, the company said in an earnings statement. Because of Microsoft's partnership with Yahoo that requires the Redmond, Wash.-based company to provide search technology for Yahoo sites, Microsoft receives 12% of Yahoo's net revenue from pay-per-click ads. Yahoo paid Microsoft $36 million for the quarter, and has paid the company $104 million since the agreement took effect in Microsoft's second quarter, per the revenue sharing agreement.

The deal also stipulates that Microsoft must reimburse Yahoo for costs throughout the partnership's transition period. During the second quarter, Microsoft reimbursed Yahoo $55 million for search operating costs and $12 million for transition costs.

Microsoft earned $17.4 billion in overall revenue in the quarter, an 8% increase year-over-year. The company's full-year revenue grew 12% compared with the prior fiscal year to $69.9 billion. Net income leaped 30% to $5.9 billion in the period and 23% to $23.1 billion for the year.

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