Blogs

Opening Microsoft's annual meeting with financial analysts in Redmond this morning, CEO Steve Ballmer addressed the key topic of the day -- saying he considers the financial risks Microsoft is taking in its online initiatives worthwhile given the potential reward.

Ballmer sought to support his contention with numbers, saying that the annual loss posted in the company's online services business was about 5 percent of Microsoft's companywide operating profit. At the same time, he said, the opportunities in the online business could ultimately amount to 40-60 percent of Microsoft's current economic value.

"It's a relatively small percentage investment from an overall Microsoft standpoint in order to have a real opportunity at significant overall acceleration of our market value," Ballmer said, calling it a "very good" balance of risk vs. return.

Among other things, Ballmer cited the potential for Microsoft to come up with new innovations in the Web search business. But so far, at least, the company hasn't been able to come up with anything to significantly boost its search market share. Ballmer also didn't give a specific timeline for reaching profitability in the online unit, and in that way, his comments may not comfort investors looking for a light at the end of the tunnel.