Microsoft has admitted an online advertising agency it bought five years ago is – in essence – worthless.
It will write off the value of the company, aQuantive, losing the equivalent of almost five billion euros.
The charge is likely to wipe out all profit from the world’s largest software company’s latest quarterly results.
The purchase was supposed to help Microsoft compete with Google’s digital ad firm DoubleClick 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 $8.5 billion (6.76 billion euros) last year. But it never proved a success and aQuantive’s top executives soon left Microsoft.
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”.
Microsoft’s online services division is the biggest drag on its earnings, currently losing about $500 million (398 million euros) a quarter as the company invests heavily in Bing in an attempt to catch market leader Google. The unit has lost more than $5 billion (3.98 billion euros) in the last three years alone.
Even though its market share has been rising, Bing has not reached critical mass required to make the product profitable.
Get a different perspective
Every story can be told in many ways: see the perspectives from Euronews journalists in our other language teams.