Microsoft buys R2 Studios
Video News provided by IBTimes TV. Visit for Latest News, and Business News

Microsoft is taking a $6.2bn (£4bn) writedown on its acquisition of the online advertising company AQuantive Inc.

The writedown is the result of a slow rate of growth in Microsoft's online services division. Revenue per search has remained sluggish despite Microsoft making substantial investments in the unit.

Microsoft bought AQuantive in 2007 for $6.3bn with the intention of surpassing Google in online advertising revenues and countering its purchase of digital ad company DoubleClick.

"The acquisition did not accelerate growth to the degree anticipated, contributing to the writedown," Microsoft said in a statement.

"This is an accounting decision that the company made based on how the business is performing relative to the projections we had made during the past five years," Microsoft chief executive Officer Steve Ballmer and online unit president Qi Lu wrote in an email to employees, Bloomberg reported.

The company also said it expects lower growth and profitability for its other online services units, which include search engine Bing and the MSN website.

The charge will probably result in the tech giant posting a loss for the quarter, ending in June. Analysts previously expected Microsoft to post a profit of $5.3bn (£3.5bn) on 19 July, when the fourth quarter results will be announced.

The online services division has not been profitable for the company. Although Bing doubled its market share to 15 percent over the past three years, Microsoft has lost nearly $500mn each quarter in its online services unit. Microsoft invested heavily in Bing, but it has yet to catch up with rival Google.

The online services unit has lost over $5bn since its launch in 2009, according to a Reuters report.

"Online services is the biggest drag on the company right now," Colin Gillis, an analyst at BGC Partners in New York, was quoted by Bloomberg as saying.

Microsoft's acquisition of AQuantive for £6.3bn was its biggest purchase in 2007. Last year it bought Skype for $8.5bn.