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.
Gamal Qumwa, the chairperson of the energy committee in the Jordanian parliament, said that the preliminary agreement includes supplying Jordan with 150 cubic feet of natural gas from Gaza's field.
The 5,000-member force launched on Friday will be part of the federal police and focus on guarding agriculture, mining, and oil and gas production against criminal groups.
As a candidate for membership of the EU, Serbia is under pressure to bring its foreign policy into line with that of the 28-member EU
Judge said a proposed law announced by Argentina's president this week would violate orders he imposed favoring creditors who refused to accept restructured bonds following the country's record 2002 default.
It is too early to say how the sanctions will have an impact on Statoil’s activities in Russia, according to company official.
Brazil's ambassador to Moscow says he is confident mutual trade can be boosted after Russian authorities approved nearly 140 Brazilian meat producers who are set to gain from sanctions imposed on Russia over Ukraine.
The tanker loaded the Kurdish crude at the Turkish port of Ceyhan around Aug. 8, and made a partial delivery to Croatia via a ship-to-ship transfer last week.
Soaring Chinese demand for commodities like coal has underwritten Mongolia's rapid growth, with more than 90 percent of its exports sold to China.
In a sign of frustration at the lack of broad support for reform, Sheremeta said on his Facebook page that he no longer wanted to "fight against yesterday's system".
McDonald's operates 438 restaurants in Russia and sees the country as one of its top seven major markets outside the United States and Canada
A tanker has docked at Es Sider and begun loading 600,000 barrels of oil, said Mohamed El Harari, spokesman for state-run National Oil Corp
Ethiopia, Africa's largest coffee grower, is set to continue talks with global buyers in hopes of branding and trademarking its world-renowned coffee and boosting national revenue.
Russia has banned the import of EU food products including fruit and vegetables from Poland, whose total food exports to Russia were worth around $1.5 bln last year.
Ukraine is prepared to compromise on the price until a lawsuit it has filed against Gazprom is resolved, minister Yuri Prodan said.
Finnish electricity specialist Hiekkala: 'Finland and Baltic countries have possibilities to replace the import from Russia by own capacity or Nordic import.'
The Bahraini-based Dar Group (Al-Shair and Partners) and its Egyptian subsidiary, Dar al-Handasah, were awarded the contract worth some $1.8 billion to draw up the master plan for Egypt's Suez Canal development project.