Microsoft announced that it would take a $6.2 billion writedown on an advertising company that it purchased five years ago. The news cuts back Microsoft's growth expectations and show that the move might take a lot longer to pay off.
Up until yesterday, analysts had expected Microsoft's last quarter profit to be $5.3 billion. The writedown of AQuantive will most likely wipe any profits Microsoft had off the sheets.
A writedown is when a company lowers the value of an asset on its balance sheet because it thinks that the company is overvalued compared to what the market thinks it should be worth.
"The acquisition did not accelerate growth to the degree anticipated, contributing to the write-down," Microsoft said in a statement.
Microsoft bought AQuantive for $6.3 billion back in 2007 in order to keep pace with Google as the companies bought companies specializing in online advertising (Google bought DoubleClick). The deal hasn't worked out well for Microsoft's online division, which has been losing money. Instead, the tech giant will have to wait for a while before money starts flowing in again.
Microsoft, however, claims that the search engine Bing has improved their revenue per search and market share. Google is still the dominant search engine and player in the online ad/search game.
Microsoft shares rose less than 1 percent near the end of the trading day to $30.76. Shares of Microsoft have gained 18 percent so far this year.
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