Microsoft is to take a US$6.2bn writedown – almost exactly what it paid – for its acquisition of online advertising firm AQuantive. The software giant acquired AQuantive in 2007 for US$6.3bn to compete more effectively against Google.
But unlike Google, advertising isn’t at the heart of what Microsoft does, and the investment has effectively been allowed to sputter out. It also reveals that from an online perspective, things aren’t rosy at Microsoft by any stretch of the imagination.
Microsoft is likely to post a record loss for the quarter ending in June because of the writedown.
Accounting rules dictate that the software company has had to take the writedown because its online business isn’t growing fast enough and the acquisition of AQuantive hasn’t delivered the revenues that had been hoped for.
Microsoft’s loss-making online division is now relying on gains by its Bing search engine to deliver growth.
“Bing search share in the US has been increasing, revenue per search (RPS) has been growing, MSN is the No 1 portal in 29 markets worldwide and the company’s partnership with Yahoo! has continued to expand geographically,” the company stated.
“While the Online Services Division business has been improving, the company’s expectations for future growth and profitability are lower than previous estimates,” Microsoft said.
Media motion image via Shutterstock
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