John Paczkowski

Recent Posts by John Paczkowski

aQuantive Writedown Deflates Microsoft Earnings

Image: nito / Shutterstock.com

Microsoft shareholders concerned that the company’s $6.2 billion writedown of its 2007 acquisition of online ad company aQuantive would wipe out most of the profits in its latest quarter were right to worry.

Posting fourth-quarter earnings after market close Thursday, Microsoft reported a loss of 6 cents a share on revenue of $18.06 billion. This is the first ever quarterly loss for the company.

Wall Street analysts had been expecting Microsoft to report earnings per share of 62 cents on revenue that rose about 5 percent to $18.15 billion. But those estimates did not take into account the aQuantive writedown. Excluding charges related to the aQuantive write down, and deferred revenue for the Windows 8 upgrade promotion, Microsoft would have earned 73 cents a share on $18.6 billion in sales. Excluding the aQuantive impairment alone, earnings per share were 67 cents. So, all things considered, this was a beat.

That and future prospects were apparently what investors were focusing on as they immediately sent the stock up 1.9 percent to $31.24 in after-hours trading.

CEO Steve Ballmer was also looking forward. “We delivered record fourth quarter and annual revenue, and we’re fast approaching the most exciting launch season in Microsoft history,” Ballmer said in the company’s earnings release. “Over the coming year, we’ll release the next versions of Windows, Office, Windows Server, Windows Phone, and many other products and services that will drive our business forward and provide unprecedented opportunity to our customers and partners”.

Breaking down earnings by business segment, Microsoft’s Server & Tools division saw revenue rise 13 percent year over year; revenue for its Business Division, which includes Office, rose 7 percent; at the company’s Entertainment and Devices Division, revenue grew 20 percent; Online Services Division increased its revenue by 8 percent; and at the company’s Windows & Windows Live Division, revenue declined 13 percent. Finally, Microsoft saw shipments of Windows Phone handsets rise more than 50 percent from the prior quarter.

Image: nito / Shutterstock.com


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik