Microsoft has posted a loss of $492 million in the past quarter, the first ever for the software giant, as results were hit by a previously announced writeoff for its online ad business aQuantive.
The software company, which was launched 26 years ago, had warned two weeks ago that it would take a $6.2bn (£3.9bn) charge in the April to June quarter because its 2007 purchase of online ad service aQuantive had failed to help it compete with Google.
Including the big write-down on aQuantive, Microsoft posted a $492m (£313m) loss in the fiscal fourth quarter compared with earnings of $5.9bn (£3.75bn) a year ago.
Revenue rose 4% to $18.06bn (£11.5bn).
Microsoft’s fortunes are now tied to its October 26 release of Windows 8, the most extreme redesign of the company’s flagship operating system since 1995.
Windows 8 will feature a new look and boast new technology that will enable the operating system to work on touch-controlled tablet computers, as well as Microsoft’s traditional stronghold of desktop and laptop computers.
In conjunction with Windows 8, Microsoft is planning to release its own tablet, the Surface, to compete with Apple’s iPad.
AQuantive was Microsoft’s most expensive purchase at the time, and was supposed to help it mount a more serious challenge to Google in online ads.
But the online ad division continued to post losses – totaling more than $9bn (£5.7bn) since the purchase, not including the charge.
By contrast, Google’s search engine, a major vehicle for selling ads, has remained strong, while Microsoft’s Bing search engine saw its market share drop slightly to 26%, from 27% a year ago.
That includes searches through Yahoo, which has been using Microsoft’s search technology for nearly two years.