Microsoft has warned that it will post a huge $6.2bn write-down in its fourth quarter, mostly related to the disappointing performance of online advertising business aQuantive it bought five years ago.
The writedown signals 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 this announcement, analysts had predicted that Microsoft would report profit of $5.3 billion in the period.
Microsoft bought AQuantive for about $6.3 billion in 2007 to catch Google, amid an acquisition spree for companies that specialize in online advertising. The deal failed to accelerate growth as much as anticipated.
Back in 2007, Microsoft bought aQuantive weeks after Google said it would acquire DoubleClick, 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. The company hasn’t boosted revenue per search as much as it had projected.
In addition to the charge, Microsoft said its forecast for future growth and profitability at its online services arm – which includes the Bing search engine and MSN internet portal – are “lower than previous estimates”.