Software giant Microsoft will be taking an accounting charge of $6.2 billion due to the non-performance of its internet services division, aQuantive, which it had acquired five years ago. The accounting charge, called a write-down of good will, was mainly a write-off of the value of aQuantive.
The charges may wipe out any profit for Microsoft’s fourth quarter. The software firm is expected to report quarterly earnings on July 19.
“...will take a non-cash, non-tax-deductible income statement charge for the fourth quarter of fiscal year 2012 for the impairment of goodwill in its online services division segment, mostly related to its 2007 aQuantive, acquisition,” Microsoft said in a statement.
Microsoft acquired aQuantive for about $6.3 billion in cash in 2007 in a bid to increase revenues from search-related advertising. The write down effectively wipes out the acquisition’s value.
The company said the write down of the online service has been because of “lower expectation for future growth and profitability.”
“The acquisition did not accelerate growth to the degree anticipated, contributing to the write down,” Microsoft said.
However, the company said it did not expect this accounting write down to affect its ongoing business or financial performance.
