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"There is this huge, huge, huge new opportunity around the internet and online and we have to embrace that opportunity and invest in that opportunity," Ballmer told investors at Redmond.

Microsoft recently announced that it was to invest an additional $500 million into its online business unit, which recently posted its eighth straight quarters of losses.

The division lost $1.23 billion in the past fiscal year, representing around 5.5% of Microsoft total operating income, double that of 2007.

However, Ballmer was unrepentant and claimed the company was willing to endure losses of up to 10% of the company's total operating income in order to make the search and advertising business a success. Ballmer refused to confirm how long this period would last, he did claim the potential was worth the risk.

Ballmer took to the stage in place of outgoing division head Kevin Johnson, and joked: "We thought it was important whoever was going to get up and talk about the big investment online was going to be here in three weeks and so you're stuck with me."