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)


  1. Second-level thinking is good, but I think this misses the forest for the trees. Call me a first-level thinker, but all I see is a company that continually destroys value created by it's legacy franchises. Meanwhile, the castle's moats are under heavy attack.

  2. or did their auditor force them and they had no control over the timing?