Microsoft Takes $6.2 Billion Write-Down for aQuantive Acquisition

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 Microsoft€™s Bing search engine.

The write-down is a reduction in what is called €œgoodwill€ in the parlance of publicly traded companies, which refers to the portion of the company€™s 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 Division€™s goodwill was based largely on the aQuantive acquisition. €œAs 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 Bing€™s share of the U.S. search market has been increasing, revenue per search has been growing and that the company€™s 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 Google€™s search share fell 5 percent in May, to 65 percent, while Bing€™s rose by 5 percent, to 28.1 percent, compared with May of 2011. Meanwhile, comScore, which tracks just the U.S. search market, put Google€™s share at 66.7 percent in May and Bing€™s at 15.4 percent, largely unchanged from April. In May 2011, Google's share was 65.5 percent and Bing€™s 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 Yelp 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.

€œWhile the aQuantive acquisition continues to provide tools for Microsoft€™s online advertising efforts, the acquisition did not accelerate growth to the degree anticipated, contributing to the write-down,€ Microsoft stated.