Microsoft has written down $6.2 billion (£3.95bn) off the value of aQuantive, an online advertising agency it bought five years ago for $6.3 billion.
aQuantive remains Microsoft’s largest acquisition in the Internet sector and was the biggest in its history until it bought Skype for $8.5 billion last year.
It was hoped that aQuantive could help Bing compete with Google. Instead, it has left a hole in the Microsoft’s balance sheets that could completely wipe out its fourth quarter profits.
According to Advertising Age magazine, in 2005, Seattle-based aQuantive ranked 14th in terms of revenue among advertising agencies worldwide.
Yesterday, Microsoft announced it will write-down $6.2 billion off the value of aQuantive, effectively admitting that buying the advertising agency was an expensive mistake.
“The acquisition did not accelerate growth to the degree anticipated, contributing to the write-down,” said a statement from Microsoft.
Microsoft also said its expectations for future growth and profitability of its online business, including Bing and MSN portal, are “lower than previous estimates”, reports Reuters. Currently, Microsoft’s online services division is losing money at a rate of $2 billion a year.
The $6.2 billion write-off is likely to hit the company’s profits for the last fiscal quarter. According to Reuters, Wall Street was expecting Microsoft to report fourth quarter net profit of about $5.25 billion.
What do you know about Tech stocks and shares? Take our quiz!
Targetting AWS, Microsoft? British competition regulator soon to announce “behavioural” remedies for cloud sector
Move to Elon Musk rival. Former senior executive at X joins Sam Altman's venture formerly…
Bitcoin price rises towards $100,000, amid investor optimism of friendlier US regulatory landscape under Donald…
Judge Kaplan praises former FTX CTO Gary Wang for his co-operation against Sam Bankman-Fried during…
Explore the future of work with the Silicon In Focus Podcast. Discover how AI is…
Executive hits out at the DoJ's “staggering proposal” to force Google to sell off its…