Microsoft's 2007 acquisition of digital marketing company aQuantive for $6.3 billion did not achieve the intended result of rapidly accelerating the growth of Microsoft's online advertising business to catch up with Google. As a result, Microsoft is taking a $6.2 billion write-down for the quarter ended June 29.
Microsoft says it will take a $6.2 billion
write-down on its books for the inability of its Online Services Division to
make a success out of its $6.3 billion 2007 acquisition of the digital
marketing services company aQuantive. The Online Services Division is the home
of Microsofts Bing search engine.
The write-down is a reduction in what is
called goodwill in the parlance of publicly traded companies, which refers to
the portion of the companys total value that is based on its reputation with
customers and the market in general, rather than its tangible assets like
inventory, real estate or manufacturing facilities.
Microsoft said in a July 2 statement that the
Online Services Divisions goodwill was based largely on the aQuantive
. As a result of its 2012 impairment review, Microsoft has
determined that a write-down of its Online Services Division goodwill of
approximately $6.2 billion is required, the company stated.
While Bing is still a distant No. 2 to top-ranked
Google in terms of search engine market share, Microsoft touted some recent improvements.
It said Bings share of the U.S. search market has been increasing, revenue per
search has been growing and that the companys partnership with Yahoo has
continued to expand geographically. Microsoft handles the business operations
of Yahoo Search.
New figures from the survey firm Experian
Hitwise show that Googles search share fell 5 percent in May, to 65 percent,
while Bings rose by 5 percent, to 28.1 percent, compared with May of 2011.
Meanwhile, comScore, which tracks just the U.S. search market, put Googles
share at 66.7 percent in May and Bings at 15.4 percent, largely unchanged from
April. In May 2011, Google's share was 65.5 percent and Bings 14.1 percent, so
Bing has shown some improvement.
The number of unique visitors doing searches at
each site is critical to the financial success of the search engines because
the more visitors a site enjoys, the more money it makes from advertisers. Bing
announced in June plans to team with the Website
to place Yelp ratings of restaurants, stores and other businesses
alongside site search results. It followed a move by rival Google to
incorporate Zagat reviews into its Google+ Local Pages search function.
While the aQuantive acquisition continues to
provide tools for Microsofts online advertising efforts, the acquisition did
not accelerate growth to the degree anticipated, contributing to the write-down,