Microsoft have recently written down the value of an online advertising firm that they bought nearly five years ago by £4billion. Microsoft originally bought the adveritising firm in 2007 for £4.1billion in an attempt to compete with Google in a race to increase revenues from search-related advertising.
The write down essentially wipes out the acquisition’s value. However, there was very little impact of the writedown on Microsoft’s shares last night in trading. The write down was partly as a result of Microsoft’s acquisiton of Skype for £5.4billion later in 2007.
Microsoft have suggested that the acqusition of the advertising firm did not effected growth as anticipated and this contributed to the writedown. Even analysts and investors were not surprised with the writedown.
However, even though the writedown itself is not neccessarily the worse case scenario for Microsoft, its forecast for future growth and profitability are lower than previous estimates.