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Microsoft $6.3 billion aQuantive disaster

Microsoft bought online advertising service aQuantive in 2007 for a staggering $6.2 billion. The plan was to be in a position to take on Internet search leader Google Inc.

Microsoft have acknowledged that the aQuantive deal didn’t make as much online advertising as first thought, forcing the management to write off most of the $6.3B purchase price. This non cash charge means that Microsoft Corp could be dealing with a fiscal fourth quarter loss, ending June. Analysts polled by FactSet said that Microsoft would earn around $5.3 billion for the period.

Microsoft haven’t suffered a quarterly loss during 20 years of operation, according to their website.

The aQuantive deal was the most expensive deal in Microsoft history until they bought chat service Skype last year for $8.5 billion.

Google bought DoubleClick for $3.2 billion 8 months after Microsoft acquired aQuantive. Google have had more success with DoubleClick, with their annual profit and advertising sales more than doubling. Last year, Google earned $9.7 billion and took $36.5 billion in ad revenue alone. Microsoft’s online division sustained a loss of $9 billion since they bought aQuantive. By comparison their online division marked $2.5 billion in revenue during fiscal 2011, only $54 more than their fiscal 2007 results.

Microsoft said yesterday in a statement “The company’s expectations for future growth and profitability are lower than previous estimates.”

Microsoft’s Bing has been growing steadily, although it hasn’t been impacting Googles market share, just mainly Yahoo’s. Google’s share of U.S. search advertising has risen from 74 percent in 2010 to 78 percent this year. Yahoo’s search advertising percentage has fallen from 10 percent in 2010 to less than 5 percent this year. Microsoft’s has held steady at 7 percent.

Kitguru says: An expensive mistake for Microsoft.

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