Feeds

Microsoft takes a $6.2bn bath with aQuantive web ads write-down

Theres no baby in this horribly expensive water

Beginner's guide to SSL certificates

Microsoft has taken a $6.2bn hit by writing down the value of aQuantive - the mega acquisition Steve Ballmer boasted would transform his company into an online advertising biz.

The Windows software giant suffered the financial blow in its fourth fiscal quarter, which closed at the end of June and the results of which are due to be announced this month. Microsoft is now expected to report a loss for Q4, which had been expected to make a $5.3bn net profit

aQuantive was, until Skype last year, Microsoft’s biggest single corporate purchase: it paid $6.3bn for the digital marketing group in August 2007 just before the economic bubble burst.

The acquisition was supposed to make Microsoft an online advertising powerhouse, serving ads through coordinated and interactive campaigns for clients that would span Xbox Live, Windows Live, Office Live and MSN.

It was supposed to be Microsoft's answer to the Google online ads juggernaut - specifically countering Google's purchase of advert-delivery network DoubleClick for $3.1bn in April 2007. Microsoft had called for a US government investigation of the DoubleClick purchase; when that failed, it seems, the software titan succumbed to growing pressure by making an ads deal of its own.

Microsoft chief executive Steve Ballmer promised to turn his company into an advertising biz, calling it the next evolution in Microsoft's online ads strategy. He answered skeptics by saying Microsoft had no choice but to make "big bets" and to execute its master plan "very well".

In announcing the deal, he said Microsoft was "intensely committed" to maximising the "digital advertising opportunity for all".

However, the Windows 8 giant said this Monday that the acquisition hadn’t accelerated growth to the degree anticipated. Also, worryingly, expectations for future growth and profitability for the Online Services Division – home to Bing – are lower than previous estimates. Online Services is one of the weakest performing parts of Microsoft’s business divisions, dipping in and out of the red.

The aQuantive deal had given Microsoft media planning and buying capabilities, interactive advertising agency Avenue A/Razorfish, and advertising tools. So committed was Microsoft that it passed control of all its advertising activities to aQuantive chief executive Brian McAndrews.

A year after the deal, though, McAndrews was gone and aQuantive staff complained they were being marginalised. In 2009 Microsoft sold Razorfish for $530m. ®

The next step in data security

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.