updated 08:00 pm EDT, Mon July 2, 2012
Absorbing one-time $6.2 billion charge for poor ad performance
Microsoft is taking a one-time $6.2 billion charge to offset the lack of revenue from aQuantive, an ad service it purchased. The non-cash charge is likely to drive Microsoft $1 billion into the red for its fourth fiscal quarter ending in June, assuming estimates of $5.3 billion in profits pre-charge are correct. Quarterly results from the software giant are expected on July 19.
Since Microsoft purchased online advertising service aQuantive for $6.3 billion in 2007, Microsoft's online department has reported $9 billion in losses. To counter Microsoft's purchase, Google purchased aQuantive competitor DoubleClick in 2008. DoubleClick earned Google $9.7 billion in the last year on $38 billion in revenue, primarily from advertisements.
At the time, the aQuantive deal was the largest in Microsoft's history, and still stands as the second largest today. Only the $7 billion acquisition of Skype eclipses the 2007 deal.
The company said in a statement that "the aQuantive acquisition continues to provide tools for Microsofts online advertising efforts, the acquisition did not accelerate growth to the degree anticipated, contributing to the write down." Microsoft doesn't expect any long-term damage to its ongoing business or future financial performance from the charge. Microsoft stock lost 13 cents today to close at $30.43.