Not too long ago we reported on Microsoft’s massive $900 million loss on the Surface, and now we’re learning more on exactly just how bad things are for Microsoft’s Surface division. According to mandatory paperwork filed with the Securities and Exchange Commission, Microsoft’s revenue on their Surface division – which includes both the Surface RT and the Surface Pro – was $853 million. The problem? The same report also indicates that Microsoft spent $898 million to advertise their tablet line, which means that Microsoft didn’t even make up the amount spent in advertising since the product launched.

Obviously, Microsoft is in crisis mode at this point, trying desperately to save their Surface product line, which many once thought would be a major hit for Microsoft, from complete disaster. The company slashed the price of their Surface RT lineup by $150, bringing the 32GB Surface RT down to $349. Microsoft is also close to wrapping up development of Windows 8.1, their next major version of Windows, which brings several key improvements to Windows 8. Both the Surface RT and the Surface Pro will receive an update to Windows 8.1 free of charge when it launches before the end of the year.

While things may look grim, all hope is not lost for Microsoft – the company is expected to announce their next generation Surface lineup within the next couple of months, bringing with them such rumored enhancements as an upgrade to the Tegra 4 SoC for the Surface RT, Intel’s next-generation “Haswell” Core i7 processors on the Surface Pro (which should also improve battery life, which is horrendous on the current Surface Pro), and a thinner body on both. A 7″ tablet is also said to be in the works, though earlier rumors indicated that such a tablet might carry the Xbox brand rather than the Surface brand.

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