AQuantive Written Off, MSNBC Sold

Operations acquired with aQuantive will be written off at a cost of US$6.19 billion, and NBC has bought Microsoft’s 50% stake in MSNBC, an online news joint venture that the companies launched in 1996. Both moves signal lower ambitions for the company’s Online Services division, which encompasses Bing and other online advertising businesses.

Scaling Back Online Ad Estimates

Microsoft will take a US$6.19 billion charge against earnings for the quarter ended June 30, 2012, mostly due to declines in goodwill for businesses acquired with aQuantive. Purchased in 1997 for US$6.3 billion, aQuantive included the Avenue A|Razorfish advertising agency (sold to Publicis in 2009), Atlas ad management software, drivePM ad exchange, and other online advertising businesses.

Goodwill represents the value of an acquired business over and above the business’s assets: by writing down most of the goodwill associated with the aQuantive businesses, Microsoft is acknowledging that these businesses now have little market value. Microsoft says that it estimates lower growth and profitability for the aQuantive businesses than it did originally, although it has not explained why its estimates have changed so radically since it last formally reviewed them in May 2011. Around the time of the write-down, Microsoft eliminated hundreds of jobs in its online advertising sales and marketing units, according to Bloomberg.com and other publications.