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

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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

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