Business, Economics and Jobs

Microsoft to lose $6.2 billion over advertising writedown


Microsoft is taking a $6.2 billion writedown over its 2007 acquisition of online ad company aQuantive.


Ron Wurzer

Microsoft announced Monday that it would be taking a $6.2 billion writedown for its 2007 acquisition of online ad company aQuantive. 

The Redmond, Washington-based software company will most likely post a loss this quarter, its first in at least the past 10 years, according to the Seattle Times

Before Microsoft's statement about the loss, analysts had predicted that the company would report profit of $5.3 billion for the past quarter, which ended in June, Bloomberg Businessweek reported

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The software giant's Online Services department has been "wildly unprofitable" since acquiring aQuantative, CNN Money reported, posting total losses of roughly $10.4 billion since 2007 and $479 million in this year's third quarter. 

"While the aQuantive acquisition continues to provide tools for Microsoft's online advertising efforts, the acquisition did not accelerate growth to the degree anticipated, contributing to the write down," Microsoft said in a news release.

Microsoft has struggled to catch up to competitor Google, whose $3.2 billion acquisition of DoubleClick, an online ad service that was formerly a direct competitor of aQuantive, the Associated Press reported.

Last year, the search engine earned $9.7 billion on nearly $38 billion in revenue, with most of its profits coming from online ads, according to the AP. 

"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 in its news release.

“Online services is the biggest drag on the company right now,” Colin Gillis, an analyst at BGC Partners LP in New York who has a buy recommendation on Microsoft, told Bloomberg Businessweek. 

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