Microsoft Corporation is the largest international company producing various kinds of software for personal computers and other high-tech devices. Over the past few years, the corporation has achieved strong financial results, despite the competition and difficulties associated with the global economic crisis. However, the company was unable to avoid financial losses due to investment errors.
Following the results of work in the next quarter of 2012, Microsoft Corporation decided to voluntarily write off $ 6, 2 billion from its profits. This is necessary to cover the costs incurred by the company after failing investments in various sectors of the Internet, according to a press release from Microsoft.
Financial reporting standards in the United States require companies to review business performance for each business unit at least once a year. If the investment decision falls short of expectations, the company must voluntarily adjust earnings by providing shareholders with reliable financial performance information. In particular, this principle applies if the amount of the acquisition of other companies exceeded the value of the assets of the acquired business and did not generate income.
Microsoft's unsuccessful investment is primarily related to the purchase of aQuantive advertising agency a few years ago. With the help of this purchase, it was supposed to strengthen Microsoft's position in the Internet advertising market relative to Google. The takeover actually turned out to be meaningless and did not bring the expected results. The sum of costs exceeding $ 6 billion is large even for a giant corporation like Microsoft.
In addition to this unsuccessful investment, Microsoft's growth is expected to slow as Bing search engine and MSN's development lag behind expectations. According to some indications, the profit of these services and the user base will be significantly lower than the forecasted indicators, which determines their unprofitableness. According to research, in the US search market, Bing occupies about 15%, and the share of the search engine Google is more than 60%. Despite temporary investment setbacks, Microsoft plans to release a number of new products in the near future and continue to expand its sphere of influence in the complex IT-technology market.
