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Microsoft has just released third quarter results and it doesn’t paint a rosy picture when it comes to making money online. This years sales figure is $14.45 billion which is very less improvement over last year when sales were $14.4 billion. $0.47 a share in adjusted net income was a happier story, compared with $0.38 a year ago. Management took great pains to remind us that the year-ago quarter was the launch period for consumer-level Vista versions, so the comparisons should be tough.Microsoft is still playing catch up with Google in online advertising and services.

Their server software division showed some improvement but consumer software sales and profits slowed down a bit. The entertainment division posted a small operating profit of $89 million which is 68 percent over last year. Although this division is still very small in the grand scheme of things.

The online services department reported $843 million in sales, up from $603 million last year. Out of this, Microsoft’s recent purchase aQuantive generated $143 so the overall organic growth was a modest $97 million, or 16 percent. Unfortunately, higher sales did not translate into operating profits, as the segment racked up $228 million in losses this time, 33 percent worse than last year.

In comparison Yahoo reported 9 percent revenue growth and essentially flat earnings of $0.11 per share, if one-time gain of $0.36 per share from investments in Chinese search engine Alibaba are removed. That’s way better than Microsoft’s online efforts, but the two would-be partners combined made just $173 million this quarter, which compares rather badly to Google’s $1.31 billion net profit.

Recent price action in the two stocks involved shows growing investor skepticism towards a quick deal. Microsoft’s stock gained nearly 9 percent in value last week while Yahoo lost 4 percent. Given that the proposed deal is half in cash, half in Microsoft stock, that means that investors in Yahoo are willing to sell their shares at significantly less than the deal’s value. The offer today stands at $30.62 per share, while Yahoo’s stock sells for $27.30.