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Microsoft to take $6.2 bn writeoff for online unit
by Staff Writers
New York (AFP) July 2, 2012


Microsoft said Monday it would take a $6.2 billion writedown to reflect the slump in value of its online services division.

The charge reflects a writedown related to the 2007 acquisition of aQuantive, a digital advertising firm aimed at helping Microsoft compete against Google and others.

The charge, to be reflected in the company's upcoming earnings report, is required under accounting rules to reflect a lower value or so-called "goodwill impairment."

"The goodwill in the Online Services Division was substantially the result of the 2007 acquisition of aQuantive," Microsoft said.

"As a result of its 2012 impairment review, Microsoft has determined that a writedown of its Online Services Division goodwill of approximately $6.2 billion is required."

Microsoft announced the deal in August 2007 in a move aimed at seizing market share from rivals Yahoo! and Google in the lucrative market that tailors advertising to Internet search results.

Despite the writedown, Microsoft said the share of Internet search from its Bing unit has been increasing, and that revenue per search has also been growing.

"MSN is the number one portal in 29 markets worldwide and the company's partnership with Yahoo! has continued to expand geographically," Microsoft said in a statement.

"While the Online Services Division business has been improving, the company's expectations for future growth and profitability are lower than previous estimates."

The 2007 deal raised eyebrows because of the price tag of aQuantive at more than $6 billion.

Jon Ogg at 24/7 Wall Street said that while the charge appears large, "it is not as though Microsoft is having to fork out $6.2 billion in cash."

"Still, when investors see a $6.2 billion charge, it is not going to go unnoticed," Ogg added.

Microsoft shares fell 0.43 percent to $30.43 in after-hours electronic trade.

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