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Earnings day: Google flies high, Microsoft posts first-ever loss

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Stephen Lam/Reuters/File

(Read caption) Google announced healthy earnings today; Microsoft announced its first-ever loss since it went public in 1986. In this file photo, Google director of product management Vic Gundotra takes the stage at the company's I/O 2012 Conference in San Francisco.

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Two of tech's biggest companies held their earnings calls on Thursday, and while Google executives got to report good news, Microsoft had a bitter pill to swallow: its first loss per share in its history as a public company.

Let's start with the positive. Google reported a 21 percent increase in revenue, thanks mostly to its Internet advertising business. The gains come in spite of a 16 percent year-over-year drop in ad rates, the amount that Google charges advertisers when users click on their ads. Many users are surfing on smart phones and tablets, where ads aren't as lucrative as on desktop computers -- but the total number of clicked-on ads increased 42 percent over last year, more than making up for the loss.

In its post-earnings conference call with analysts, Google execs also pointed to the success of past acquisitions like YouTube and the Doubleclick ad service, which are now big cash cows for the company. Its latest acquisition, hardware company Motorola, hasn't quite found its footing yet, reporting a loss of $233 million last quarter on $1.25 billion in revenue. Google probably isn't worried, though: Motorola gives it a leg up to compete against the likes of Apple and Samsung in the smart phone and tablet market.

Over at Redmond, the mood was a little more somber. Microsoft announced an operating loss of about $492 million due to a stock writedown, undertaken as a result of the company's 2007 acquisition of aQuantive, an ad company that didn't pan out. That accounting adjustment means that Microsoft is logging its first-ever quarterly loss since it went public 26 years ago.

In spite of the writedown, though, Microsoft isn't exactly on the ropes, and the rest of the company is humming along smoothly. Revenue is up 4% over last quarter, thanks mostly to the success of the Office suite and the company's enterprise division. And, of course, there's big things on the horizon for Microsoft, including the Windows 8 release this October, the forthcoming Surface tablet, and a new version of Office. In fact, CFO Peter Klein told The Wall Street Journal that 2013 would be "the biggest product launch year" Microsoft has ever had.

Microsoft also noted that sales of traditional PCs have been slumping. That means there's a lot riding on the company's enterprise software business, as well as on Windows 8, which is designed for both tablets and computers and which might help Microsoft stay competitive against Apple's iPad and Google's Android tablets.

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