Source: Microsoft

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Microsoft this morning gave Wall Street analysts new information about some recent behind-the-scenes reshuffling of its business groups. In the process, the company provided details about the financial performance of groups whose results are normally hidden in the numbers released for their parent divisions.

Most notably, Windows Live lost $560 million in Microsoft's 2009 fiscal year, on revenue of $520 million, according to one of the slides that accompanied the online presentation.

In addition, the slide shows a loss of $50 million, on revenue of $360 million, for Microsoft's Razorfish advertising agency in the 2009 fiscal year. Microsoft agreed to sell Razorfish to Publicis Groupe for $530 million last month in a deal scheduled to close in the fourth quarter of this year.

The losses are notable but not huge in the scheme of the larger company. Microsoft overall posted revenue of $58.44 billion and operating profit of $20.36 billion in fiscal 2009, which ended June 30.

Windows Live's result illustrates the challenges facing that group as it tries to generate revenue from its base of more than 500 million users worldwide. Windows Live includes widely used programs such as Messenger and Hotmail, in addition to Windows Live Essentials applications including Movie Maker, Photo Gallery, Live Writer and many others. Under Microsoft's current structure, the Windows Live group doesn't include the MSN portal or the Bing search engine.

Windows Live generates revenue mainly through advertising. Windows executive Tami Reller told analysts this morning that Windows Live's expenses come in three major areas: Data centers; research and development and innovation; and sales and distribution. She said those types of investments will continue to be important for Windows Live, signaling that Microsoft plans to keep spending significantly in those areas.

"Windows Live is clearly strategic to the company and strategic to Windows," Reller said on the conference call. "That's true for the short term and the long term."

Windows Live shifted from Microsoft's Online Services Division to its Client Division as part of the broader reshuffling. Reller said Microsoft made the change in large part recognize the connection between Windows Live and the Windows PC operating system, which makes up the bulk of the Client Division.

In addition, Microsoft shifted its Mobile Services Business from its Online Services Division to its Entertainment & Devices Division. (Note: Corrected since original post, see comment below.) That business reported $70 million in revenue and a $50 million operating loss, according to the same Microsoft slide.

For purposes of accounting, Razorfish was shifted from Microsoft's Online Services Division to a general corporate category while the sale to Publicis is pending.

The Seattle Times noted the accounting changes earlier today.