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 hackers broke into a database storing details of people who had registered for ECB conferences, visits and other events, the bank said.
Russia generated $356 billion from oil, gas exports last year, data shows.
While stopping far short of targeting physical energy supplies, EU ministers for the first time this week raised the idea of restricting Russian access to oil and gas technology.
They were among nine organisations and three people added to the EU's Syria sanctions list, published in the bloc's Official Journal
Land reform remains a sensitive issue in South Africa, where 20 years after the end of apartheid the white minority still holds around 87 percent of commercial farm land.
Talks are reportedly underway for a number of investment projects, including in pharmaceuticals and automotive assembly, but no final investment agreements are expected this week.
The yuan will be the world's third largest currency after the U.S. dollar and euro, a Chinese report predicts.
Unemployment currently stands at 12.7 percent in Kenya and affects 30 percent of the country's population
GM so far this year has recalled about 14.7 million vehicles worldwide with switch-related issues and has linked at least 16 deaths to those issues.
The deal includes hydropower and nuclear power plants in the South American country.
State-run think tank Korea Institute for Defense Analyses (KIDA) reported earlier this month that a twin-engine version of the fighter jet is expected to cost around 8.5 trillion won
Western officials have repeatedly warned Iranian counterparts over the past six months that more economic pain is a risk for an OPEC member whose oil exports have already shrunk to a fraction of what they could have been
The EU's employment commissioner said he has asked to meet with Microsoft to discuss the social impact of the layoffs.
Although China has promised to invest in Brazil for years and failed to deliver, the pace of deals is picking up with a focus on deficient infrastructure.
The financial aid would be used for rebuilding houses and public buildings, the rapid restoration of water and energy supplies and urgent assistance for those still without proper shelter.
Washington and Brussels say Moscow has been fanning separatist violence in eastern Ukraine and broadened their sanctions, sending Russian shares and the rouble currency down.