World Bulletin / News Desk
Microsoft Corp admitted its largest acquisition in the Internet sector was effectively worthless and wiped out any profit for the last quarter, as it announced a $6.2 billion charge to write down the value of an online advertising agency it bought five years ago.
The announcement came as a surprise, but did not shock investors, who had largely forgotten Microsoft's purchase of aQuantive in 2007, which was initially expected to boost Microsoft's online advertising revenue and counter rival Google Inc's purchase of digital ad firm DoubleClick.
Microsoft's shares dipped slightly to $30.28 in after-hours trading, after closing at $30.56 in regular Nasdaq trading.
The world's largest software company said in a statement that "the acquisition did not accelerate growth to the degree anticipated, contributing to the write-down."
Microsoft bought aQuantive for $6.3 billion in cash in an attempt to catch rival Google Inc 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 last year. But it never proved a success and aQuantive's top executives soon left Microsoft.
As a result of its annual assessment of goodwill - the amount paid for a company above its net assets - Microsoft said on Monday it would take a non-cash charge of $6.2 billion, indicating the aQuantive acquisition is now worthless.
The charge will likely wipe out any profit for the company's fiscal fourth quarter. Wall Street was expecting Microsoft to report fiscal fourth-quarter net profit of about $5.25 billion, or 62 cents a share, on July 19.
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".
The company did not say what those previous estimates were, as it does not publish financial forecasts.
Microsoft's online services division is the biggest drag on its earnings, currently losing about $500 million 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 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.
Before rolling out Bing in June 2009, Microsoft's Windows search engine had 8 percent of the U.S. Internet search market, compared with Yahoo's 20 percent and Google's 65 percent.
In the three years since then, Bing has almost doubled its market share to 15 percent, but that has been mostly at the expense of Yahoo, which has had its share whittled down to 13 percent. Google now has almost 67 percent, according to research firm Comscore.
Yahoo's internet searches are powered by Microsoft's Bing under a 10-year agreement initially struck in 2009. Microsoft hands back to Yahoo 88 percent of revenue generated from search ads on Yahoo sites. That deal has not met the ambitious targets set by either company.
The move away from the U.S. dollar is yet another reaction to Western sanctions placed on Russia since it annexed Crimea from Ukraine in March.
Norwegian oil company Statoil and Shell won an exploration license in the southeastern part of Algeria.
Under EU rules, if the Commission's suspicion that the tax treatment amounted to illegal state aid is proven, the company could be forced to pay that money back to the Irish government.
The court ordered searches of all known offices and residences of the former first lady and Congresswoman Imelda Marcos in Manila and Ilocos Norte in a bid to recover the works of art.
British energy expert Nick Butler said Israel should use its gas reserves domestically as it cannot compete with other markets.
After several rounds of talks brokered by the European Union, Moscow and Kiev reported progress at a meeting last week in Berlin.
The company's stock price has regained some of its recent losses but a European Union investigation could spell trouble for the tech giant.
U.S. planes are flying about 60 reconnaissance sorties per day, and some 1,600 U.S. troops are being deployed in Iraq.
"There are good reasons to continue the energy partnership with Russia," she said and noted that within the European Union different countries had different levels of dependency on supplies
Osborne said he would clamp down on technology companies which "go to extraordinary lengths to pay little or no tax here" as part of his plans to fix the budget shortfall.
Union wants Lufthansa to maintain a scheme that allows pilots to retire early at the age of 55 and still receive up to 60 percent of their pay
The pilots decided to end the strike without reaching an agreement with the French airline even though talks resumed
Ozkan Yorgancioglu, prime minister of the Turkish Republic of Northern Cyprus, said Israel's gas should be sent to Europe via Turkey and Cyprus
Rosneft and U.S. energy giant ExxonMobil have found huge oil reserves in the Kara Sea region
Cy Tokmakjian sentenced to 15 years in prison for bribery and other economic charges in a case his company
Exxon and Rosneft signed a $3.2 billion agreement in 2011 to develop the region.