Microsoft Taking $6.2 Billion Charge, Lowers Online Services Growth Expectations

July 3, 2012 at 2:33 am Leave a comment

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Microsoft Corporation (NASDAQ: MSFT) disclosed that it will need to take a massive charge after the close on Monday. Before you hit the panic button here you really need to understand what the charge is about even though the figure is massive on the surface. The charge is a non-cash accounting charge, so it is not as though Microsoft is having to fork out $6.2 billion in cash. Still, when investors see a $6.2 billion charge it is not going to go unnoticed.

Steve Ballmer and friends will recognize a “non-cash, non-tax-deductible income statement charge for the fourth quarter of fiscal year 2012 for the impairment of goodwill in its Online Services Division segment, mostly related to its 2007 aQuantive, Inc., acquisition.” In short, it is effectively a writedown of the company’s goodwill on the balance sheet (listed as almost $19.7 billion for the last quarter).

Microsoft noted…

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