Microsoft is likely to report a quarterly loss after taking a $6.2 billion charge against its balance sheet in writing down the value of its aQuantive online advertising service, bought in May 2007, almost to zero. The decision reflects its inability to produce further revenue from the service.
The company blamed the setback primarily on aQuantive’s disappointing performance, and admitted that while business in its online services division – in which its Bing search engine and aQuantive were housed – has been improving “the company’s expectations for future growth and profitability are lower than previous estimates.”
This year, eMarketer estimates Google will take 77.9 per cent of all US search ad revenues, up from 74.4 per cent in 2011. While Microsoft’s search revenues are expected to grow in 2012, the company’s share of overall US search advertising revenues are expected to remain at 7 per cent, the same as last year. When combined with search revenues from Yahoo, the two companies’ share will fall to 11.5 per cent in 2012, down from 13.7 per cent in 2011, the company estimates.
At $6.2 billion the aQuantive purchase was, at the time, the most expensive acquisition in the company’s 37-year history; only its $8.5 billion purchase of Skype last year surpassed it. Microsoft seemed to have been rushed into the purchase by Google’s acquisition of the rival advertising network DoubleClick for $3.1 billion at the same time.
The disappointing performance comes at a time when Google has expanded its online ad empire, despite Microsoft’s attempts to lure surfers and marketers.