Microsoft Corporation has the corporate goat on the write-down front. On July 2nd, the software giant finally took a $6.2 billion charge on the 2007 purchase of aQuantive - a deal which cost $6.2 billion, in cash, up front. The deal was supposed to "expand upon the Company's previously outlined vision to provide the advertising industry with a world class, Internet-wide advertising platform, as well as a set of tools and services that help its constituents generate the highest possible return on their advertising investments." It sounded good at the time, but aQuantive never even came close to completing its mission.
As for how the purchase and write-down were logged on the accounting statements, the cash laid out for the initial purchase came out of cash (or current assets) on hand in 2007. MSFT shareholders didn't mind at the time, as it would be placed as an asset in the goodwill line, and was expected to more than self-fund itself overtime. But, that never happened. So, to put the company out of its misery (as it was technically worthless), Microsoft finally reduced that goodwill line by $6.2 billion in the second quarter. It didn't feel quite as bad to investors, in that it didn't pull any cash out of their pocket that quarter. But, contrary to way it was spun, it did reduce the company's value by $6.2 billion
No comments:
Post a Comment