Microsoft Corp. (MSFT) is taking a $6.2 billion writedown for almost the entire amount it paid for Internet-advertising company AQuantive Inc., signaling that its online division will perform worse than the company projected.

The non-cash charge means the company will probably post a loss for the quarter, which ended in June. Before yesterday’s statement, analysts had predicted that Microsoft would report profit of $5.3 billion in the period, data compiled by Bloomberg show.

Microsoft bought AQuantive for about $6.3 billion in 2007 to catch Google Inc. (GOOG), amid an acquisition spree for companies that specialize in online advertising. The deal failed to accelerate growth as much as anticipated at the company’s money- losing online division, Microsoft said. The company won’t reverse losses as quickly as it intended, said a person with knowledge of the matter, who’s not authorized to speak publicly.
“Online services is the biggest drag on the company right now,” said Colin Gillis, an analyst at BGC Partners LP in New York, who has a buy recommendation on Microsoft.

Microsoft’s shares declined 0.7 percent to $30.36 at 9:36 a.m. in New York. It had climbed 18 percent this year through yesterday.

--Bloomberg

REVIEW

This loss is going to shave a quater of their profit off the year. Considering that the current price is at 11x P/E, which made the 6.3b a 2.2% off its price. However, seeing the rich cash holdings that they have and the current low valuation, we are not expecting any big movement on the stock for this. In fact, people on the street may have long cost this in.

What we are seeing is that at least microsoft is doing some wrong right and should be aiming for its next target. Since the online business is considered a waste, the mobile pie should seem more interesting to them. In order to add one, they should offload one so it sounds reasonable. We have been saying a marriage between Nokia and Microsoft is going to be mutually beneficial. Is it time now?