Feeds

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

Theres no baby in this horribly expensive water

Reducing security risks from open source software

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. ®

Mobile application security vulnerability report

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.