Chalk up aQuantive as another bad Microsoft buy

Summary:Microsoft's Online Services Division is taking a $6.2 billion goodwill charge for its fiscal 2012 fourth quarter that is largely attributable to aQuantive.

Microsoft is taking a $6.2 billion write-down in its fiscal 2012 fourth quarter (which ended on June 30) largely connected with its 2007 acquisition of digtal-advertising agency aQuantive.

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This is a "non-cash, non-tax-deductible income statement charge" to its already money-losing Online Services Division, according to a July 2 press release.

Remember aQuantive, the company Microsoft bought five years ago for $6 billion? (It was Microsoft's biggest acquisition ever, at that time.) Microsoft had high hopes for aQuantive back then, with some execs going so far as to claim the purchase was more like a "merger" than a traditional acquisition.

aQuantive used to be known, back in the dot-com heyday years, as "Avenue A." The digital consultancy Razorfish ultimately became part of the firm before Microsoft snapped up the company, hoping to parlay aQuantive's ad savvy into dollars.

Instead, things went badly on the Microsoft online-ad front.

The former aQuantive CEO Brian McAndrews jumped ship a year after the Microsoft acquisition. In 2009, Microsoft sold off Razorfish (for $530 million).

Microsoft ended up doing another search/ad-focused deal in 2010 with Yahoo -- deciding in the eleventh hour against buying that company. There've been problems with that partnership around Microsoft being able to deliver the revenues guaranteed and anticipated.

To top it all off, in 2011, Microsoft ended up retiring the ad-exchange platform it bought in 2007 when it purchased AdECN.

(Is anyone still wondering why the Softies got acquisition-shy?)

Last quarter, Microsoft's Online Services Division, the home of Bing and its online ad technologies, lost $480 million (which was actually $300 million less than the comparable previous quarter).

Microsoft is set to report its fourth quarter fiscal 2012 earnings on July 19.

Topics: Tech Industry, Microsoft

About

Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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