Monday, July 2, 2012

Microsoft Takes $6.2 Billion Writedown On $6.3B aQuantive Acquisition in 2007 (Online Advertising)

In online advertising tech news, Microsoft is taking a $6.2 billion writedown on assets in its "Online Services Division" (a non-cash impairment charge on goodwill), which, according to the release, was related to its $6.3 acquisition of aQuantive in 2007. I did more research on aQuantive and saw that it owned the digital ad firm Razorfish, which MSFT then sold to French firm Publicis Groupe for $530 million in 2009. I actually just passed a Razorfish office in Chicago's Merchandise Mart. Here is a post I did a few days ago on how to reinvent internet advertising. How about hologram ads (see below).

"Microsoft Announces Non-Cash Accounting Charge
Company will take a write down in its Online Services Division goodwill.


REDMOND, Wash., July 2, 2012 /PRNewswire via COMTEX/ -- Microsoft Corp. today announced that it will take a non-cash, non-tax-deductible income statement charge for the fourth quarter of fiscal year 2012 for the impairment of goodwill in its Online Services Division segment, mostly related to its 2007 aQuantive, Inc., acquisition.

Under accounting guidelines, companies are required to conduct an annual goodwill impairment test for each business unit. Goodwill arises in an acquisition when the fair value paid for a business exceeds the value of the identifiable net assets. The goodwill in the Online Services Division was substantially the result of the 2007 acquisition of aQuantive. As a result of its 2012 impairment review, Microsoft has determined that a write down of its Online Services Division goodwill of approximately $6.2 billion is required.

Bing search share in the U.S. has been increasing, revenue per search (RPS) has been growing, MSN is the No. 1 portal in 29 markets worldwide and the company's partnership with Yahoo! has continued to expand geographically. While the Online Services Division business has been improving, the company's expectations for future growth and profitability are lower than previous estimates.

Microsoft completed its acquisition of aQuantive on Aug. 13, 2007, in an all-cash transaction valued at just over $6.3 billion. While the aQuantive acquisition continues to provide tools for Microsoft's online advertising efforts, the acquisition did not accelerate growth to the degree anticipated, contributing to the write down.


Microsoft does not expect this accounting write down to affect its ongoing business or financial performance."

Source: MarketWatch/PR Newswire


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