Microsoft writes down $6.2bn for ailing adtech firm

The software giant has announced it will make a loss for the quarter after writing down the value of AQuantive, the online ad firm it bought in 2007.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
Microsoft bought AQuantive in an effort to snatch back a share of the display ad market from rival Google. Back in 2007, it was Microsoft’s most expensive acquisition to date, setting ol’ Gates back $6.3bn.

But fortune has not smiled on AQuantive. The business – which automates the process of selling and serving online display ads – was the second largest firm in the business in the mid noughties, but it has failed to match the growth of Google’s Double Click (also acquired in 2007).

This week, Microsoft has been forced to admit defeat. Profit and growth projections for the firm have been trashed, and Microsoft is taking the $6.2bn non-cash charge on the chin. Before the writedown, analysts had predicted that Microsoft would report profit of $5.3 billion for the quarter. This move will put Microsoft in the red for the period.

But Microsoft isn’t just taking a financial hit – its reputation will suffer too. The down and out failure of a core area of its advertising business will raise doubts about its efficiencies elsewhere in the business. The software corp had little choice but to wave the white flag: since the AQuantive deal, Microsoft’s internet businesses as a whole have suffered operating losses of some $9bn, almost as much as the revenues over that period of $11.5bn.

Following the writedown announcement, Microsoft has also revealed it is to downgrade its forecast for future growth and profitability for the whole online services arm – including search engine Bing and the MSN internet portal. However, in a testament to ongoing investor confidence, Microsoft share price closed just 0.1% lower last night. Perhaps the firm’s recent acquisition of enterprise network Yammer, and rumours of a next generation Xbox in the pipeline, have been enough to satisfy investors that the giant is not ready to short circuit quite yet...

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