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Microsoft Posts First Quarterly Loss

Due to its failed aQuantive acquisition, Microsoft posted its first quarterly loss $92 million -- this week.

“What would have been $5.3 billion in profit was wiped out from one bad deal,” MG Siegler writes on his paris lemon blog, referring to Microsoft’s $6.2 billion write-down of aQuantive.

“Loss per share -- and this is the first time Microsoft reported a negative EPS in its history -- was $0.06,” TechCrunch reports.

Still, revenue for the quarter -- $18.06 billion -- was up from $17.41 billion last quarter, and $17.37 billion in the fourth of 2011.

“Aside from that one-time cost [of writing down aQuantive] Redmond is trending in the precise direction it wants to be,” writes The Verge. “The quarter's revenue figure represents an increase of 7% from the same time last year, with its quarterly operating income of $6.93 billion representing a twelve-percent increase.”



Indeed, “the non-adjusted numbers for the quarter show a loss of six cents per share and revenue of $18.1 billion, but even with the write-down … Microsoft still reflected 4% growth in Q4 revenue year to year,” marvels ReadWriteWeb.

What’s more, “Microsoft has a potentially big year ahead with the release of Windows 8, Office 2013 and presumably the next version of SharePoint,” RWW adds. “That’s a lot of cash to be raked in, especially given the strong numbers coming in from Windows 7.”

Either way, “this has been an interesting time at Microsoft's Advertising, following recent layoffs and industry grumbles that the company might be abandoning its ad business,” Business Insider notes.

2 comments about "Microsoft Posts First Quarterly Loss".
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  1. David Carlick from Carlick, July 20, 2012 at 1:29 p.m.

    This discussion highlights a flaw in the accounting system. Because the aQuantive acquisition had to be treated as a 'purchase' with associated 'goodwill,' then the goodwill sat on the books until it was deemed to be 'impaired.' The amount of the goodwill was inflated, of course, by the go-go prices at the time of the acquisition. The write-off does not impact cash or cash flow. It is a giant accounting entry, and it functions like a red-herring to observers distracting from decent underlying fundamental performance. I personally miss the days of 'pooling' which the accounting gods banished. In pooling, shares of the merging companies are 'pooled' and redistributed pro-rata according to the relative valuations, and no goodwill is created.

  2. Kelly Smith from The WebSmith Group, July 20, 2012 at 1:49 p.m.

    I am not an accountant and cannot give a detailed analysis of the issue like David Carlick did above. The one thing I will say is that every company must be on their toes and constantly innovating themselves all the time. Anybody who decides to sit back and rest on their profits or previous winnings, will shortly be in trouble.

    Microsoft has been around for quite a while and is well known around the world, but since Bill Gates left, they haven't been as focused nor as powerful as they once were. Many companies and technologies have swooped in to take advantage of their laziness. Apple Computer, who was once saved by Microsoft, now totally eclipses them in terms of profitability and technological domination.

    I try to teach this principle to all of my customers, but only a few of them listen. Most of my customers, or at least the ones I talk to about becoming my customers, are way far behind in marketing themselves. I own an Internet marketing company in Reno Nevada ( and every single one of the people I talk to all say the same thing: “Kelly, you're exactly what I need, but I don't have the money.”

    Meanwhile, their competitors and larger companies who have the means to market themselves, are taking many of their customers away, and they don't even realize it. This is very frustrating for me as a marketer.

    But if I was the head of Microsoft, I would feel exactly the same way. A once overly dominant player in the industry who could rightly be accused of holding a monopoly, now barely holds onto a fraction of their former standing.

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