Microsoft takes $6.2B charge for online advertising agency aQuantive
Online is a tough business, even for someone as big and supposedly skilled as Microsoft (Nasdaq: MSFT), which reportedly took a $6.2 billion charge in its last quarter to write down the value of an online advertising agency it purchased five years ago in its attempt to compete with Google (Nasdaq: GOOG) for online dollars.
Microsoft admitted that "the acquisition (of aQuantive) did not accelerate growth to the degree anticipated, contributing to the write-down, Reuters reported. To add salt to the open wounds, the software giant also admitted it had lower expectations for growth and profitability across its entire online services unit, including Google search engine competitor Bing and the MSN Internet portal.
Chasing Google, as Microsoft is doing with Bing and other parts of its online services group, is an expensive--and thus far--money-losing proposition, the story said, noting that the software giant is currently losing about $500 million a quarter and has lost more than $5 billion in the last three years. Even for Microsoft, that's a tough bill to swallow.
On the plus side, Bing over the last three years has about doubled its market share to 15 percent but is still far in Google's rear-view mirror as the search engine giant rolls along with about a 67 percent market share. Bing's gains were Yahoo!'s loss, the story noted, as its 20 percent share three years ago slipped to 13 percent. Even there, though, Microsoft is hardly in the catbird's seat. In 2009 Bing and Yahoo! signed a 10-year agreement where Yahoo!'s Internet searches are powered by Bing and Microsoft hands back 88 percent of revenue generated from search ads on Yahoo! sites.
The most recent damage to the company's bottom line, though, was the aQuantive business which Microsoft bought for $6.3 billion in 2007 only to see aQuantive's executive team leave. By taking the $6.2 billion loss, Microsoft's essentially saying that business is a bust--and maybe that it wasn't such a good idea in the first place.
- see the Reuters story