Microsoft's Failed Acquisition of aQuantive

            

Details


Case Code : CLBS132
Publication date : 2013
Subject : Business Strategy
Industry :Information Technology
Length : 05 Pages

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Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

The case is about US-based software company Microsoft's acquisition of aQuantive, a US-based digital marketing services and technology company. The company was acquired in 2007 but Microsoft could not derive any benefit from the acquisition and its revenues from online advertising remained stagnant. In 2012, Microsoft wrote off about US$6.2 billion, reflecting the loss in value of aQuantive. The case discusses the main reasons behind the failure of the acquisition.

Issues:

Understand acquisition as a growth strategy.
Examine the rationale behind the acquisition.
Analyze acquisition as a strategy to face competition.
Examine the reasons for failure of acquisitions.


Introduction

In July 2012, US-based multinational software company Microsoft Inc. (Microsoft) announced a loss of US$ 492 million for the quarter ending June 2012, though its revenues stood at US$ 18.06 billion. This was Microsoft's first quarterly loss in 20 years. The loss was attributed to a goodwill write-down of US$ 6.2 billion in the company's online services division, mostly related to aQuantive Inc. (aQuantive), a US- based digital marketing services and technology company that Microsoft had acquired in 2007. Microsoft announced, "While the aQuantive acquisition continues to provide tools for Microsoft's online advertising efforts, the acquisition did not accelerate growth to the degree anticipated, contributing to the write down."

Headquartered in Redmond, Washington, Microsoft was established in the year 1975 by Bill Gates and Paul Allen. From 1987 to 2012, Microsoft acquired more than 100 companies. Its first acquisition in 1987 was Forethought , which designed the prototype of PowerPoint, a presentation program. Several other acquisitions followed, including important ones like Hotmail , Design Intelligence , Multimap , and Skype...

Key words:
Microsoft, aQuantive, acquisition, writedown, display ads, search advertising, internet advertising, online advertising, failed acquisition, Avenue A| Razorfish, DRIVEpm, Atlas

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