Published on July 20th, 2012 | by Paterson Prosper0
Microsoft Reports First Quarterly Loss Ever
Microsoft is a company that literally released nothing last year and still made 25 billion in profits. This write-off had to happen sooner or later, and right now was the perfect time, before the Windows 8 and Office 2013 launch. They still have about $5.5B in cash they didnt have before.
Updated at 6 p.m. ET: Microsoft, the once-dominant computer software giant that has seen its fortunes wane in recent years, posted its first quarterly loss since emerging as a public company in 1986 Thursday as it took a huge charge for a failed acquisition.
The Redmond, Wash.-based company reported a net loss of $492 million as its operating income was wiped out by a $6.2 billion writedown related to its acquisition of advertising company aQuantive in 2007. Microsoft wrote down almost the entire $6.3 billion purchase price.
Microsoft had announced earlier this month that it would take the writedown.
The charge was an acknowledgement that the company’s struggling online services division is a significant financial drag on the company, losing nearly $2 billion over the past year in addition to the $6.2 billion writedown. Microsoft is still pouring money into runner-up search engine Bing, but it only has a fraction of the market share rival Google enjoys.
“It brings into question Microsoft’s ability to compete on the advertising-driven web and suggests this is a market segment that is beyond Microsoft, creating long-term doubts over Bing’s future,” Rob Enderle, principal analyst at the Enderle Group, said via email.