Microsoft to take $6.2-bn charge on 2007 online ad firm acquisition

Microsoft Corp will take a hefty $6.2-billion write-down in its fourth quarter, related mostly to the disappointing performance of an online advertising business it acquired five years ago.

Microsoft would probably see red in the quarter which ended June with the charge analysts say. The company has plans to report its fourth-quarter and fiscal-year earnings 19 July and according to analysts polled by Bloomberg the software behemoth would earn around $5.3 billion for the quarter.

The Redmond, Washington based company said the accounting adjustment, known as a goodwill impairment, stemmed mostly from the acquisition of internet advertising firm aQuantive for $6.3 billion in August 2007.

Even before the announcement yesterday, analysts had criticised Microsoft for its spotty record of acquisitions, including speculation that it had overpaid for aQuantive. A high-profile bid in 2008 for Yahoo Inc failed to materialise, and its May 2011 acquisition of internet phone service Skype - for $8.5 billion, its biggest purchase ever - was seen by investors as a big risk.

However, according to analysts Microsoft would have to make such moves to diversify.

The company's Bing search engine lags far behind Google, and its Windows smartphones have failed to make a significant dent in the market dominated currently by iPhones and Android-powered devices.