Tuesday, July 3, 2012

Quick thought on Microsoft's write-down

Microsoft announced a $6.2 billion goodwill write-down for the fourth quarter of fiscal year 2012 related to its aQuantive acquisition in 2007.

Howard Marks always talks about second-level thinking. So, when we deconstruct this announcement, what do we see?

What I'm wondering is, why the fourth quarter? The management has a lot of leeway to shift this kind of charges around. Why did the management select the fourth quarter? Are they preparing a clean slate for FY2013? Or an even more bullish thought: are they expecting outsize profit in FY2013 and don't want the write-down to mar it?

Just a thought.

(Disclosure: Long MSFT)