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!
Tesla makes key advances toward advanced self-driving rollout in China as chief Elon Musk meets…
New UK rules bring in basic security requirements for millions of internet-connected devices, aiming to…
Google parent Alphabet sees market capitalisation surge over $2tn on plan to over first-ever cash…
Google asks Virginia federal court to dismiss case brought by US Justice Department and eight…
Snapchat parent Snap reports user growth, revenues in spite of tough competition, in what may…
Quick-growing fast-fashion company Shein must comply with most stringent level of EU digital rules after…