SAN FRANCISCO - One of Yahoo Inc.’s largest shareholders is supporting the re-election of the Internet company’s incumbent board, delivering a significant blow to an attempted coup being led by activist investor Carl Icahn.

With Friday’s announcement, Legg Mason Capital Management Inc. became the biggest major Yahoo shareholder to publicly declare it will suffrage for the nine current directors — a dispose that has been under fire since Microsoft withdrew a $47.5 billion takeover bid 2 1/2 months ago in a disagreement over excellence.

Legg Mason, a mutual fund manager, owns 4.4 percent of Yahoo’s stock.

The final ballots in Yahoo’s do battle with Icahn will be cast at the company’s annual meeting Aug. 1.

Signaling that Yahoo is pulling out all the stops in its campaign, the company on Friday began promoting its argument against Icahn forward the main page of its Web site — one of the world’s most trafficked online destinations.

Icahn, a billionaire with a a long time history of challenging the boards of struggling companies, wants to supply the want of Yahoo’s directors with his own hand-picked slate so he can negotiate a sale of all or part of Yahoo.

But Legg Mason said it believes the current board can just as easily handle any future negotiations with Microsoft as the Icahn-backed candidates.

“We believe the current board acted with care and steady application . when evaluating Microsoft’s offers,” Legg Mason Chairman Bill Miller said in a statement. “We believe the plank is independent and focused on value creation for long-term shareholders.”

Icahn didn’t respond to a Friday request for comment.

Microsoft has said it doesn’t believe it can negotiate a deal with Yahoo’s current board.

Yahoo shares gained a penny to $22.45 in Friday’s late trading. That’s well below the $33 per share Microsoft had previously offered to buy the entire company.

Miller aforesaid he met several times with Yahoo Chief Executive Jerry Yang — one of the company’s board members — before deciding which margin to support.

Although Legg Mason plans to vote for all of Yahoo’s current directors, Miller said he hoped the company could reach a expose the repute of with Icahn to avoid two more weeks of dirt slinging before the annual meeting.

Negotiating a truce could require Yahoo to give up a hardly any board seats to Icahn and his allies, a potentially grievous pill given that Icahn has alienated the company by teaming up with Microsoft to make a bid for Yahoo’s search engine. Yahoo rejected that essence last Saturday, a move that Icahn lambasted as “another grave mistake.”

In an indication that Legg Mason believes Icahn deserves a place on Yahoo’s board, Miller wrote, “We believe it is appropriate for large shareholders to have representation on corporate boards if they so desire.”

In the past two months, Icahn has accumulated a 5 percent stake in Yahoo to outstrip Legg Mason’s holdings. Yahoo has responded by portraying Icahn as a hired investor primarily interested in a short-term windfall.

Now with Legg Mason on its side, Yahoo has lined up support from the owners of at least 14 percent of its shares, including Yang and fellow Yahoo co-founder David Filo, who together sway well-nigh 10 percent of the company’s stock.

Another major Yahoo shareholder, Gordon Crawford of Capital Research Capital Investors, has publicly expressed his anger with the company’s board without stating how strength will vote in the upcoming showdown. Crawford’s decision will be crucial because his fund owns more than 6 percent of Yahoo’s stock.

Shareholder advisory firms also will sway the battle when they issue their opinions. The largest advisory firm, RiskMetrics ISS, plans to make its recommendation by Wednesday.

Yahoo’s second-quarter earnings report, due out Tuesday, also could affect shareholder opinion.

After antagonist Google Inc.’s second-quarter profit disappointed investors Thursday, analysts believe Yahoo’s results will be a letdown too. If that happens, more shareholders may be inclined to oust a board that has overseen more than two years of financial malaise.

Even so, most analysts seem to think Yahoo’s directors will win enough succor to hold on to their jobs, reasoning that major shareholders won’t want to turn the keys over to Icahn — each Internet tyro.

Yahoo pointed out Icahn’s technology inexperience in a campaign against his coup make trial that it unveiled on its home page Friday. The material reiterates much of the information that Yahoo has already presented directly to its shareholders and filed with the Securities and Exchange Commission.

But the decision to present its arguments to its mainstream audience made for a strange juxtaposition. At one point, Yahoo’s attack on Icahn appeared just above a list of reader-recommended stories with the headlines, “11-year-old tracks down speeders with toy radar gun,” and “Flight attendant wins space trip after fishing wrapper from trash.”

A new undersea fiber-optic cable being laid betwixt Cuba and Venezuela will help provide high-speed Internet access to Cuban citizens by 2010.

Earlier this week, Wikileaks published documents that were signed in 2006 by dint of. officials in Cuba and Venezuela describing plans for the new undersea cable that will connect the two countries.

The United States economic prohibit from leaving port against the isle nation has forced the communist country to rely on slow and expensive satellite links for Internet connectivity, according to the Wikileaks article. Even though it would cost less and be more efficient to lay a new cable between Cuba and the U.S., which are only 120 kilometers apart, Cuba is working with Venezuela to lay a 1,500-kilometer cable to get high-speed Internet connectivity.

The proposed cable, which is being deployed by CVG Telecom (Corporacion Venezolana de Guyana) and ETC (Empresa de Telecomunicaciones de Cuba), devise also provide high-speed Internet access to Jamaica, Haiti, and Trinidad.

According to the Wikileaks article, the new undersea cable is being built as a strategic firm between Cuba and Venezuela to encourage an interchange between the two governments; foster science, cultural and social development; and increase economic relationships among Cuba, its South American neighbors, and the rest of the world.

Cuba has traditionally kept a tight lid on Internet access in the country. In 2003, the government cracked down on habitual Cuban citizens, who were accessing the Internet over the government's painfully dull phone network.

But recently since Raul Castro has taken power from his brother Fidel Castro, the government has loosened many restrictions on average citizens. In March, a ban prohibiting ordinary citizens from owning cell phones was lifted. And in May, the Associated Press reported that Cubans are now allowed to buy desktop PCs.

Oops, again. AT&T once more announced free hotspot fit for iPhone owners early Friday on its Web site, but then quickly removed the posting. The exclusive carrier for Apple's iPhone made a similar blunder in May.

The now-removed notice reportedly read, "AT&T knows Wi-Fi is hot, and free Wi-Fi even hotter, which is why we are proud to offer iPhone customers free access to the nation's largest Wi-Fi hotspot reticulated with more than 17,000 hotspots, including Starbucks. Now users can relax and access music, e-mail, and Web browsing services with their favorite blend in hand from the comfort of their favorite location."

AT&T confirmed that the notice was posted in error and removed. A spokesperson said the assemblage does intend to offer the service in the future.

Starbucks has announced plans to close 600 stores nationwide, so AT&T's form of 17,000 hotspots could be a bit high. Besides Starbucks, the company said the hotspots include more than 8,000 restaurants, 31 hotels, 12 airports and 18 convention centers.

In May, the company reportedly backed off its notification after discovering that anyone could make acquisition free access by using the iPhone's Safari browser.

SAN FRANCISCO (Reuters) - In a rare slip for Google Inc, Yahoo Inc and Microsoft Corp gained share as Google lost ground in the Web search market in June, toil data released on Friday shows.

Monthly data published by audience research firm comScore Inc shows Google's share of the U.S. Web search market — the origin of half the company's revenue — at 61.5 percent, down three-tenths of a percentage point from May.

Meanwhile, number-two-ranked Yahoo gained 0.3 of a percentage point to 20.9 percent in June while the market share of Microsoft, the number-three U.S. Web search player, jumped 0.7 points to 9.2 percent, comScore said.

IAC/InterActiveCorp's Ask.com and Time Warner Inc's AOL unit, the number four and number five in U.S. sift services, also lost ground, comScore data showed. Ask lost 0.2 percentage points of share to 4.3 percent and AOL's market share shrivelled by 0.4 percentage points to 4.1 percent.

The data can be seen at http://tinyurl.com/comScore-June/.

(Reporting by Eric Auchard; Editing by Braden Reddall)

BOSTON/SAN FRANCISCO (Reuters) - Fund manager Bill Miller, one of Yahoo Inc's top shareholders, dealt a blow on Friday to billionaire investor Carl Icahn's two-month campaign to replace the Internet firm's directors, throwing his support behind Yahoo's current board.

Miller, a prominent portfolio manager at Legg Mason Inc, also called for an end to the "disruptive" battle between Yahoo and Icahn, an activist shareholder who has sought to force Yahoo to restart talks to sell itself to software maker Microsoft Corp.

Miller urged Icahn and Yahoo to settle their differences ahead of an August 1 annual meeting where shareholders will vote to elect the entire board of the company.

"It is our intention to vote in favor of the slate of directors proposed by the current board," said Miller, who is chairman and chief investment officer at Legg Mason Capital Management, in a statement.

Legg Mason's 4.4 percent stake of 60.7 million shares makes it Yahoo's second-biggest institutional shareholder.

Since February, Yahoo has rebuffed Microsoft's $47.5 billion offer to buy the firm, triggering a slide in Yahoo's stock price and paving the path for Icahn to align himself with Microsoft and start a proxy battle.

Icahn announced in May he had amassed a stake that now totals about 5 percent of Yahoo shares.

Microsoft has since made alternative proposals to Yahoo, which says it's open to a takeover by the software titan but little headway has been made.

Miller, 53, had been critical of Yahoo's board earlier for rejecting Microsoft's $33 a share offer but swung toward it after Icahn and Microsoft offered a plan to effectively dismantle Yahoo by selling its search business to Microsoft, according to Jefferies & Co analyst Youssef Squali.

"Icahn has done a 'bait and switch' on Miller and everybody else," Squali said. He added that by strongly backing Yahoo's board, Miller is in a state to help the sides reach a compromise before the deal.

FUND'S PAIN

Miller told Reuters last week Icahn would have more support if he promised not to sell Yahoo below $33 per share. adhering Friday, he praised the Yahoo committee's actions in the bruising battle with Microsoft.

"We believe the current board acted with care and diligence when evaluating Microsoft's offers. We believe the board is independent and focused on value creation for long-term shareholders," Miller said.

Miller, however, said he was not opposed to Icahn having narration on the Yahoo board.

"In general, we believe it is appropriate for large shareholders to have representation on corporate boards if they so desire. Mr. Icahn's slate includes the community experienced in technology, advertising, capital markets and governance," he said.

"We would prefer that the company and Mr. Icahn reach a mutual agreement on the composition of the board and end this disruptive proxy contest," Miller said.

Capital Research & Management is the biggest shareholder of Yahoo, owning about 16.3 percent of the stanch as of the end of March. Capital has not said how it intends to vote at the meeting but blog AllThingsD reported earlier this month that it was inclined not to vote for the Yahoo board.

Capital portfolio manager Gordon Crawford was not available for comment.

Yahoo shares were up 1 cent at $22.45 on Friday afternoon amid a sell-off in technology stocks. Microsoft shares were down 6.7 percent at $25.67 after the company posted disappointing profits..

Miller is the only manager to have beaten the Standard & Poor's 500 index for 15 straight years, until 2006. But then his performance began to falter.

His main fund, the Legg Mason Value Trust, has give out 30.5 percent this year through Thursday's close against the S&P index's negative 13.2 percent return. It was in the 100th percentile in its category, according to Lipper data.

The size of the fund, what one. owned $542 million merit of Yahoo shares at the end of March, was down to $9.7 billion at the end of June, from $16.5 billion at the start of the year.

Separately, in a video message to employees, Yahoo Chief Executive Jerry Yang unveiled a campaign to use the Yahoo.com home page to take its proxy defense campaign to mainstream Yahoo users.

The home page now features an advertisement in the company's core color of purple that makes frolic of Icahn's self-professed lack of understanding of technology companies similar as Yahoo.

(Additional reporting by Kenneth Li in New York; Editing by Brian Moss and Jason Szep)

because of years, bleacher bums could pretend that their home run ball was hit by Barry Bonds, rather than Duane Kuiper. No longer. Major League Baseball will now validate home runs with a special hologram, which fans can verify in an online database.

In addition, through a partnership with IBM, a special portal will be made available to umpires to allow them to design schedules, plan for inclement weather, or receive a heads up on a possible beanball war that might break out.

It's all part of a sport where statistical information is as valued as the ability to hit a slider. To Larry Bowden, vice president of portal software for IBM, the system simply integrates a ton of statistics from numerous sources – pretty much what IBM's customers already require from the software company.

MLB has even now used holograms to label merchandise such as game uniforms with a special numbered hologram; a pilot program began greatest year. MLB employs 135 trained and bonded authenticators serving all 30 MLB franchises, whose sole job is to verify and authenticate licensed MLB merchandise and record the numbers in a online database where individual items can be verified for authenticity.

"That's correct – it's going to repress us fight counterfeit memorabilia," said Mike Morris, vice president of application development and program management for MLB.

Nine dedicated authenticators worked the All-Star Game this week, where over 200 items were authenticated, including jerseys, bats, balls, and other items. But they also added home runs to the list, of the like kind as J.D. Drew's game-tying blast in the seventh inning.

That adds a new challenge to the program – now, authenticators must be assigned to the bleachers, to what they must not only be able to track a home run as it foliage the field, but quickly identify who caught it, Morris uttered. Once verified by the authenticator, the unique holographic sticker is affixed using special glue. The identifying characteristics of the ball (who hit it, who caught it, the date, et cetera) are then entered into the MLB database, keyed to the unique ID number. The holograms were also used to label Barry Bonds' record-setting home runs last year, he uttered.

In describing the measures used to protect the authentication, Morris used the term "op sec" – operational security – indicative of how seriously the sport takes the verification of its most hallowed objects.

Of slightly less importance might be an email to an umpire letting him know who will operate the upcoming Giants-Dodgers series. But a new Umpire Desktop, powered by IBM's PortalSphere software, provides a dedicated intranet of sorts for umpires. Using Google Gadgets, umpires can get an inside look at the stand forecast or historical trends of a player's behavior.

"The Umpire Desktop provides significant, real-time information to our crews, and is a precious possession resource with respect to the overall Major League Umpiring effort," said MLB's vice president of umpiring, Mike Port, in a statement. "It is assisting not only in training and development, but also every other aspect of that which game officials do."

MLB declined a request for a screenshot of the Umpire Desktop because of the confidential information displayed there.

Following the game, umpires can file incident reports, and supervisors can add evaluations of another umpire's performance.

Morris said MLB's Port also sees the portal during the time that an important training tool. A new in-house feature is "You Make the Call," where Port sends video of a polemical or intriguing call to other umpires, who are challenged to make the correct ruling via the portal. A citation of the actual MLB rule is included.

Morris said that umpires will have a chance to review video of the game, but the inclusion of immediate replay for ruling on domicile runs, currently being considered by commissioned Bud Selig and other officials, would not be part of the system.

With the possibility of a Yahoo acquisition still uncertain, Microsoft is pouring hundreds of millions of additional investment dollars into its Online Services Business (OSB) in an aggressive effort to compete by Google in online advertising.

On a conference call Thursday to report its fiscal 2008 earnings, Microsoft Chief Financial Officer Chris Liddell related the company is investing the wealth in its online properties to drive advertising income and improve the performance and reach of its search engine and advertising network.

Microsoft's OSB is its weakest-performing division nearest to its Entertainment and Devices Division which– despite the popularity of the Xbox product– like OSB does not operate profitably.

Microsoft posted more than US$60 billion in revenue for fiscal 2008, and even OSB showed a revenue gain over of 32 percent, from $2.44 billion in 2007 to $3.21 billion in fiscal 2008.

For the year, however, OSB absentminded $1.23 billion in operating income; a nearly 100 percent increase upward of the $617 million loss in operating income in fiscal 2007.

Liddell noted that Microsoft understands the weight of investing heavily in OSB if the company doesn't reap return on that investment, especially in light of the segment's lackluster results over the years.

"We do not make these investments lightly, as the loss in this division will be a drag on an otherwise exceptionally good performance," he said.

Liddell acknowledged that had Microsoft managed to seal the deal with Yahoo during the 2008 fiscal year, which ended June 30, it would have "accelerated" Microsoft's goals for improving OSB's performance and its search business in precise, and perhaps the investments would not take been necessary.

However, when it became clear the deal would not happen in the short term, Microsoft "made more decisions to accelerate our online services' organic growth strategy," he said.

Specifically, the investments will be made in several areas of the online business, with two-thirds of the money going into Microsoft's search assets, Liddell said.

One area of focus on search will be to drive usage of its search engine, as well as "business-model innovation, specifically in the area of high-value commercial search," Liddell said.

He cited Microsoft's Cashback program as an exemplification of the latter. Launched in May, Cashback is comparative shopping characteristic in Microsoft's Live Search that offers consumers rebates on purchases of products found through the search engine. It's aimed at luring consumers away from Google and Yahoo.

Microsoft also will seek distribution partnerships to bolster online advertising and will consolidate display and search advertising into a single ad system for publishers and advertisers, Liddell said.

Microsoft also plans to invest in its adCenter advertising platform by form "small acquisitions" to improve the technology of the platform, as well as signing up new partners to increase its count of advertisers and the amount of "high-quality inventory" available to them, he said.

The desist of the money will go into Microsoft's communication and social-networking strategies, as well as a plan to provide more entertainment content by way of the MSN portal, Liddell added.

Even as it's pouring its own money into its search business, there is still a chance Microsoft will eventually acquire Yahoo or at least its search assets at some point.

As of Friday, however, the companies remained locked in a public war of words over a proxy battle led by Carl Icahn, who not long ago teamed up with Microsoft to furnish Yahoo a proposal to purchase only its search business. Yahoo rejected that proposal be unconsumed Saturday, even though Microsoft claimed it was Yahoo Chairman Roy Bostock's idea to do such a deal.

Yahoo on Friday did win some ally against Icahn, who aims to remove the current Yahoo board at a shareholder meeting next month. Legg Mason, one of the largest holders of Yahoo stock, said it will back the company's recommendations for its board of directors instead of those offered by Icahn.

There are also rumors that Microsoft is in talks with Time Warner to buy AOL to bolster Microsoft's online business. However, while a deal with AOL would be less culturally and politically fiery and possibly easier for Microsoft to negotiate, the company would not win the valuable search assets of Yahoo.

SAN FRANCISCO - Google Inc. shares tumbled more than 9 percent by midday Friday after the Internet search leader’s second-quarter earnings missed analysts’ expectations.

Management said economic turmoil in the United States and parts of Europe appears to be causing consumers to click less as a common thing on the ads that generate virtually all its profits.

That unnerved already jittery investors, although Google managers said they expect the Mountain View-based company will thrive even if the economy weakens further.

Its shares fell $48.81, or 9.2 percent, to $484.63 in midday trading Friday, leaving it in hell $500 for the first time in three months.

The red flags raised after the bell Thursday included a dramatic slowdown in the company’s hiring pace and Google Chairman Eric Schmidt’s description of the economy as “challenging.” Google’s chief economist, Hal Varian, even participated in the company’s conference call for the first time to discuss business conditions.

“That was a tip-off,” said Cantor Fitzgerald algebraist Derek Brown. “Economic sluggishness has entered the discussion at Google, more so than we have ever heard.”

Google earned $1.25 billion, or $3.92 per share, for the period of the three months ended in June. That represented a 35 percent increase from net income of $925 million, or $2.93 per share, at the same time last year.

If not for costs incurred according to employee stock compensation, Google said it would have earned $4.63 per share. That figure missed the average earnings estimate of $4.74 per share among analysts surveyed by Thomson Financial.

Google’s second-quarter revenue fared slightly better than income, rising 39 percent to $5.37 billion from $3.87 billion at the same lifetime last year.

More than half the revenue — $2.8 billion — came from international markets, helping to offset more of the economic weakness in the United States.

After subtracting commissions paid to its ad partners, Google’s revenue totaled $3.9 billion — about $30 million above the average analyst estimate.

Stanford Group analyst Clayton Moran interpreted the action as “confirmation that there is a slowdown in Internet advertising that’s affecting Google.”

The trouble may stem more from reluctant consumers than advertisers.

The number of paid clicks on the Web sites operated by Google and its partners for the period of the second quarter fell 1 percent from the first quarter, the first sequential downturn that the company has ever reported in the category. The 19 percent year-over-year enlarge in Google’s paid clicks also was the company’s lowest ever.

“Consumers are being discreet in their online spending patterns, just as they are in their off-line spending patterns,” Varian told analysts during Thursday’s conference call.

MOSCOW (Reuters) - Rambler Media, the British-registered owner of Russia's Rambler Internet portal, said on Friday it has agreed to sell the Begun advertising agency to Google Inc for $140 million.

Rambler also signed an agreement with the world's most popular search agent to use its search and contextual advertising technology on www.rambler.ru.

Under the deal, search queries made on Rambler's home page and through Rambler Search function will be enhanced by Google, season Rambler will display Google ads alongside search results.

"This agreement illustrates our commitment to investing in Russia, where online advertising is currently experiencing brisk growth," Mohammad Gawdat, Google's managing guide for emerging markets, said in a statement.

Rambler, which currently owns 50.1 percent of Begun, said in it would first corrupt the remaining 49.9 percent stake in Begun from Bannatyne Limited and then exchange the entire firm to Google.

With $69.9 million of the $140 million being attributable to Bannatyne, affiliated with the Finam group of companies, Rambler expects to receive a net gain of around $50 million.

Rambler, the only listed Russian Internet firm, said it would use the proceeds from the sale to finance its investment program and potential acquisitions.

The deal, seen closing in September, is expected to support margin improvement in future years, the company said, adding it maintained its earlier guidance for the full-year 2008.

Rambler expects revenue of between $100 million and $110 million and margin on the basis of earnings before interest, tax, depreciation and amortization (EBITDA) of 20-25 percent.

That compares with revenues of $69.1 million, which included results of Begun, consolidated since August 2007, and an EBITDA margin of 11 percent in 2007.

Rambler sees the internet advertising in Russia growing at an annual 50 percent and expects the market size will exceed $1 billion in 2010 in terms of revenues.

(Reporting by Maria Kiselyova; Editing by Paul Bolding)

SEATTLE - With a Yahoo Inc. search deal insecure at best, Microsoft Corp. plans to invest hundreds of millions of dollars more than expected in the next year to whip its unprofitable online operations into shape.

Analysts, however, wondered how long Wall Street can wait to see those bets pay done.

Microsoft said Thursday its fiscal fourth-quarter profit jumped 42 percent — or 13 percent, factoring in a hefty charge a year ago — as revenue topped $15 billion.

But due to weakness in the online avocation, which makes most of its money from Web advertising, the software maker missed Wall Street’s earnings forecast by means of a penny and issued softer-than-expected guidance for the current first quarter.

Shares sank $1.65, or 6 percent, to $25.87 in after-hours trading, after rising 26 cents to close at $27.52.

For the three months ended June 30, Microsoft’s profit jumped 42 percent to $4.3 billion, or 46 cents per share. In the year-ago quarter, earnings totaled $3 billion, hurt by more than $1 billion in charges related to defective Xbox game consoles.

Revenue increased 18 percent to $15.8 billion from $13.4 billion last year, just ahead of Wall Street’s average forecast of $15.7 billion, according to a Thomson Financial survey. The revenue rise would have been 14 percent if not for weakness in the dollar.

“Those are very good numbers for a company of our size, in what many companies are finding challenging conditions,” Microsoft’s chief financial magistrate, Chris Liddell, said in an interview.

Sid Parakh, an analyst for McAdams Wright Ragen, wasn’t buying it.

“The bottom line was disappointing,” he said in an parley. “Across the board, they are investing more in growth, which is hurting the bottom line. That’s been a concern about Microsoft that investors have felt for a long time.”

Earnings for the thee segments responsible for Microsoft’s major franchises — the Windows operating system, Office programs and server software — rose 18 percent to total $7.9 billion.

Strong PC sales helped bolster Office and Windows results. Liddell uttered Microsoft sold more than 40 the great body of the people Vista licenses in the quarter, surpassing 180 million since January 2007.

The unit responsible for Xbox 360 lost money in the quarter but ended the year in the atramentous, a milestone analysts have tracked for two years.

Microsoft’s online business, which has come under renewed scrutiny from Wall Street since the software constructor walked away from its bid to buy Yahoo in May, missed $488 million in the quarter, more than double its year-ago loss.

Liddell told analysts the company would invest hundreds of millions of dollars more than expected in the online business next year. He also forecast revenue growth for the unit would slow to between 7 percent and 11 percent in the quarter, and 18 to 20 percent for the full year, citing the tough economy.

“This is the area where we’re seeing direct impact from the economic slowdown,” Liddell said.

Again, Parakh was skeptical.

“We all know it’s much more than the economy,” Parakh said. Advertisers are waiting to be careful whether Microsoft and Yahoo will come together before spending their budgets with Microsoft, he said, and employees are distracted, too.

Walter Pritchard, an analyst for Cowen and Co., reported Microsoft was stretching the definition of long-term investing by offering so few returns after so many years of spending.

“You could go back three years ago and say, these guys are still in the same situation. (They have a) quasi-strategy in online that isn’t in truth clearly defined. They keep throwing money at it, and they’re not getting any results,” he said. “At the pace they’re investing, they should be able to grow faster.”

For the full fiscal year, Microsoft’s earnings rose 26 percent to $17.7 billion, or $1.87 per share, from $14.1 billion, or $1.42 per share in financial 2007.

Sales for the year surged 18 percent to $60.4 billion.

For the current quarter, Microsoft said it expects to earn 47 to 48 cents per share on $14.7 billion to $14.9 billion in sales, shy of analysts’ view for a profit of 49 cents per share on $15.1 billion in revenue.

For the full year, Microsoft forecast a profit of $2.12 to $2.18 per share on $67.3 billion to $68.1 billion in revenue.