Microsoft Corp admitted its largest acquisition in the Internet sector was effectively worthless and wiped out any profit for the last quarter, as it announced a US$6.2 billion charge to write down the value of an online advertising agency it bought five years ago.
The announcement came as a surprise, but did not shock investors, who had largely forgotten Microsoft’s purchase of aQuantive in 2007, which was initially expected to boost Microsoft’s online advertising revenue and counter rival Google Inc’s purchase of digital ad firm DoubleClick.
Microsoft’s shares dipped slightly to US$30.28 in after-hours trading, after closing at US$30.56 in regular NASDAQ trading.
The world’s largest software company said in a statement that “the acquisition did not accelerate growth to the degree anticipated, contributing to the write-down.”
Microsoft bought aQuantive for US$6.3 billion in cash in an attempt to catch rival Google Inc in the race for revenues from search-related display advertising. It was Microsoft’s biggest acquisition at the time, exceeded only by its purchase of Skype for US$8.5 billion last year. However, it never proved a success and aQuantive’s top executives soon left Microsoft.
As a result of its annual assessment of goodwill — the amount paid for a company above its net assets — Microsoft said on Monday it would take a non-cash charge of US$6.2 billion, indicating the aQuantive acquisition is now worthless.
The charge will likely wipe out any profit for the company’s fiscal fourth quarter. Wall Street was expecting Microsoft to report fiscal fourth-quarter net profit of about US$5.25 billion, or US$0.62 a share, on July 19.
In addition to the write-down, Microsoft said its expectations for future growth and profitability at its online services unit — which includes the Bing search engine and MSN Internet portal — are “lower than previous estimates.”
The company did not say what those previous estimates were, as it does not publish financial forecasts. Microsoft’s online services division is the biggest drag on its earnings, currently losing about US$500 million a quarter as the company invests heavily in Bing in an attempt to catch market leader Google. The unit has lost more than US$5 billion in the last three years alone. Even though its market share has been rising, Bing has not reached the critical mass required to make the product profitable.
Before rolling out Bing in June 2009, Microsoft’s Windows search engine had 8 percent of the US Internet search market, compared with Yahoo’s 20 percent and Google’s 65 percent.
In the three years since then, Bing has almost doubled its market share to 15 percent, but that has been mostly at the expense of Yahoo, which has had its share whittled down to 13 percent. Google now has almost 67 percent, according to research firm Comscore.
Meta Platforms Inc offered US$100 million bonuses to OpenAI employees in an unsuccessful bid to poach the ChatGPT maker’s talent and strengthen its own generative artificial intelligence (AI) teams, OpenAI CEO Sam Altman has said. Facebook’s parent company — a competitor of OpenAI — also offered “giant” annual salaries exceeding US$100 million to OpenAI staffers, Altman said in an interview on the Uncapped with Jack Altman podcast released on Tuesday. “It is crazy,” Sam Altman told his brother Jack in the interview. “I’m really happy that at least so far none of our best people have decided to take them
BYPASSING CHINA TARIFFS: In the first five months of this year, Foxconn sent US$4.4bn of iPhones to the US from India, compared with US$3.7bn in the whole of last year Nearly all the iPhones exported by Foxconn Technology Group (富士康科技集團) from India went to the US between March and last month, customs data showed, far above last year’s average of 50 percent and a clear sign of Apple Inc’s efforts to bypass high US tariffs imposed on China. The numbers, being reported by Reuters for the first time, show that Apple has realigned its India exports to almost exclusively serve the US market, when previously the devices were more widely distributed to nations including the Netherlands and the Czech Republic. During March to last month, Foxconn, known as Hon Hai Precision Industry
PLANS: MSI is also planning to upgrade its service center in the Netherlands Micro-Star International Co (MSI, 微星) yesterday said it plans to set up a server assembly line at its Poland service center this year at the earliest. The computer and peripherals manufacturer expects that the new server assembly line would shorten transportation times in shipments to European countries, a company spokesperson told the Taipei Times by telephone. MSI manufactures motherboards, graphics cards, notebook computers, servers, optical storage devices and communication devices. The company operates plants in Taiwan and China, and runs a global network of service centers. The company is also considering upgrading its service center in the Netherlands into a
Taiwan’s property market is entering a freeze, with mortgage activity across the nation’s six largest cities plummeting in the first quarter, H&B Realty Co (住商不動產) said yesterday, citing mounting pressure on housing demand amid tighter lending rules and regulatory curbs. Mortgage applications in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung totaled 28,078 from January to March, a sharp 36.3 percent decline from 44,082 in the same period last year, the nation’s largest real-estate brokerage by franchise said, citing data from the Joint Credit Information Center (JCIC, 聯徵中心). “The simultaneous decline across all six cities reflects just how drastically the market
RSS