microsoft writes down 62b on aquantive
Last Updated : GMT 06:59:18
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Microsoft writes down $6.2b on AQuantive

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Arab Today, arab today Microsoft writes down $6.2b on AQuantive

Washington - Arabstoday

Microsoft Corp is taking a $6.2 billion (Dh22.7 billion) writedown for almost the entire amount it paid for internet-advertising company AQuantive Inc, signalling that its online division will perform worse than the company projected. The non-cash charge means the company will probably post a loss for the quarter, which ended in June. Before yesterday’s statement, analysts had predicted that Microsoft would report profit of $5.3 billion in the period, data compiled by Bloomberg show. Microsoft bought AQuantive for about $6.3 billion in 2007 to catch Google, amid an acquisition spree for companies that specialise in online advertising. The deal failed to accelerate growth as much as anticipated at the company’s money-losing online division, Microsoft said. The company won’t reverse losses as quickly as it intended, said a person with knowledge of the matter, who’s not authorised to speak publicly. “Online services is the biggest drag on the company right now,” said Colin Gillis, an analyst at BGC Partners LP in New York, who has a buy recommendation on Microsoft.Microsoft was little changed at $30.56 yesterday at the New York close. It has climbed 18 per cent this year before today. In German trading today, the stock slipped 1.5 per cent to the equivalent of $30.09 at 10.02am in Frankfurt. ‘Slow improvement’ Even as the AQuantive deal didn’t meet projections, Microsoft said its online division has shown improvement in other areas, including revenue per search and market share gains for the Bing search engine. Operating losses in online services narrowed to $1.45 billion in the nine months through March 31, from $1.91 billion a year earlier, Microsoft said in April. Sales gained 11 per cent to $2.13 billion in the period. “It’s the classic come-from-behind, slow, incremental improvement,” Gillis said. “Bing has made incremental gains.” Microsoft agreed to buy AQuantive weeks after Google said it would acquire DoubleClick Inc, which also handles online advertising. The company had to take the writedown because the online business isn’t growing as quickly as forecast, and it’s taking longer to turn around than Microsoft expected, said the person. The company hasn’t boosted revenue per search as much as it had projected. What’s more, distribution deals in which Microsoft pays companies like Dell Inc. and Verizon Wireless have added customers — though at a high cost, the person said. “This is an accounting decision that the company made based on how the business is performing relative to the projections we had made during the past five years,” Microsoft chief executive officer Steve Ballmer and online unit President Qi Lu, wrote in an email to employees obtained by Bloomberg. “We want to be very clear that we are strongly committed to a strong and financially successful” online division, according to the memo, whose authenticity was confirmed by Microsoft. from gulfnews.com

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