Microsoft Reports Huge Loss; Blames Aquantive Mess

Dennis Faas's picture

Microsoft has announced a $492 million loss between April and June of 2012. It's the first time the software giant has experienced a net loss in a quarter since its stock was first publicly traded in 1986.

The good news for the company is that while its day-to-day business is slightly down overall, it is still fundamentally profitable. Most of the loss resulted from an accounting technicality linked to a bad investment.

The quarterly loss comes because Microsoft took a $6.2 billion writedown to cover its acquisition of Aquantive, the online advertising business it bought in 2007. The purchase price was $6.3 billion, so Microsoft is effectively conceding it paid a lot of money for an asset worth very little. (Source:

By chalking up the entire "loss" all at once, Microsoft should be able to reduce its tax liabilities for the year. (Source:

Advertising Buyout Proves A Bust

Aquantive was originally a parent company of three online marketing firms, formed in 1997. Microsoft became interested in buying the company after losing a bidding war with Google for DoubleClick, another digital marketing company.

Microsoft paid about twice as much for Aquantive as Google paid for Doubleclick.

However, Google's acquisition of DoubleClick proved to be a huge success, providing the technology now used for banner advertising -- selecting advertisements that are directly related to the content of a web page, and are thus more appealing to that page's visitors.

Analysts speculate that Doubleclick may have worked out better because Google could bring its search engine power to bear.

Microsoft Loss Overshadows Decent Performance

Despite its first ever quarterly loss, overall Microsoft is doing fairly well. In fact, the company's total revenues actually rose by four per cent.

If you take the Aquantive writedown out of the equation, the firm would have reported a $5.7 billion profit during the quarter, down only slightly from the $5.9 billion it made in the same period last year.

The figures will come as particularly welcome news given that Microsoft may have expected a dip in Windows licensing revenue because of the fear that some would-be buyers may delay their purchase of a new machine until Windows 8 is released in October.

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