Microsoft in £4 billion online marketing writedown

Microsoft has written down the value of an online advertising firm it bought five years ago by £4 billion ($6.2 billion).Microsoft bought Aquantive for $6.3 billion in cash in an attempt to catch pay per click rival Google in the race to increase revenues from search related advertising.

The writedown virtually wipes out the entire acquisition’s value, although there was little impact on Microsoft’s shares in after hours trading.

The purchase of Aquantive in 2007 was at the time Microsoft’s biggest acquisition.

It has since been eclipsed by the company’s $8.5 billion purchase of internet phone service Skype last year.

Microsoft said in a statement on Monday that “the acquisition did not accelerate growth to the degree anticipated, contributing to the writedown”.

The $6.2bn charge is likely to wipe out any profit for the company’s fourth quarter.

Wall Street is expecting Microsoft to report fourth quarter net profit of about $5.25 billion on 19 July.

In addition to the writedown, Microsoft said its forecast for future growth and profitability at its online services arm – which includes the Bing search engine and MSN internet portal – were “lower than previous estimates”.

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