Microsoft Corp. (MSFT) said Wednesday it will take a non-cash goodwill charge of about $6.2 billion in the fourth quarter reflecting the weaker-than-expected performance at its Online Services business, mainly from the acquisition of aQuantive Inc.
Microsoft in August 2007 acquired aQuantive, an online advertising agency, for $6.3 billion, ostensibly to take on Google Inc. (GOOG) in the realm of search-related advertising business.
While the software giant is seeing an increase in Bing searches in the U.S., growth in revenue per search, as well as improvement in its Online Services Division, its expectations for future growth and profit are disappointing.
In a terse statement, Microsoft said, "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."
The $6.2 billion write down is almost equivalent to the price Microsoft paid for aQuantive, implying that the expensive acquisition has not helped it to the extent envisaged. The aQuantive deal is Microsoft's second biggest buy, next only to the $8.5 billion acquisition of Skype last year.
Microsoft said it does not expect the goodwill charge to impact its ongoing business or financial performance, continuing to bank on sales of its Office suite of products to corporates even as PC sales turn sluggish.
The company in April reported a decline in third quarter profit, on weaker sales at its Entertainment segment, and absence of one-time gains recorded in the prior year.
Microsoft is scheduled to release its latest quarterly results on July 19.
MSFT closed Monday at $30.56, down $0.03 or 0.10%, on a volume of over 30 million shares on the Nasdaq. In after hours, the stock dropped $0.13 or 0.43%. In the past year, the stock trended in a range of $23.79 - $32.95.
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