Microsoft's Write Off of $6.2 Billion Online Ad Acquisition will Likely Cause Quarterly Loss

By Tracey E. Schelmetic July 03, 2012

While you may not know exactly where you want to work, chances are, it's pretty easy to discover where you don't want to work...at least this week. Microsoft announced this week that it will be absorbing about $6.2 billion as a way of correcting an error. A great, big whopping error that came in the purchase of aQuantive, an online advertising service that Microsoft shelled out $6.3 billion for back in 2007 to help position it to compete with Google in the online ad business. Needless to say, the investment didn't exactly work out. The purchase of aQuantive was Microsoft's priciest purchase to date until the company bought Skype last year for $8.5 billion.

The action of sloughing the aQuantive loss could dump Microsoft into a loss for its fiscal fourth quarter ended in June. The company had been predicted by analysts to earn about $5.3 billion for the period. If this occurs, this will be the first quarterly loss for the company in more than 20 years, the Associated Press is reporting. The company is expected to announce its quarterly results on July 19.

To add to Microsoft's embarrassment, Google has been making hay with the acquisition of a competitor to aQuantive to widen its lead in the lucrative online advertising market. Google bought DoubleClick for $3.2 billion about eight months after Microsoft bought aQuantive, and clearly the purchase has worked out well for the search giant. Google's annual profit and advertising sales have more than doubled. Last year, Google earned $9.7 billion and collected $36.5 billion in ad revenue.

Things haven't been so rosy for Microsoft. Microsoft's online division has sustained losses totaling of nearly $9 billion since the company bought aQuantive. The online division generated $2.5 billion in revenue during Microsoft's fiscal 2011, just $54 million more than in fiscal 2007, reported the AP.



 




Edited by Brooke Neuman

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

10 Benefits of Drone-Based Asset Inspections

By: Frank Segarra    1/15/2018

Although a new and emerging technology, (which is still evolving), in early 2018, most companies are not aware of the possible benefits they can achie…

Read More

VR Could Change Entertainment Forever

By: Special Guest    1/11/2018

VR could change everything from how we play video games to how we interact with our friends and family. VR has the power to change how we consume all …

Read More

Making Connections - The Value of Data Correlation

By: Special Guest    1/5/2018

The app economy is upon us, and businesses of all stripes are moving to address it. In this age of digital transformation, businesses rely on applicat…

Read More

3 Ways to Improve Your VR Projects

By: Ellie Martin    1/4/2018

There is no denying that VR is here and will most likely only increase in velocity as a terminal speed is yet to be even hypothesized. That is why it …

Read More

Alphabet to See Schmidt Step Down

By: Maurice Nagle    12/21/2017

In 2001, Google brought Eric Schmidt on board as CEO. To 10 years later become executive chairman, and continue to serve in this capacity through rest…

Read More