Microsoft has taken a $6.2bn (£3.95bn) hit on its acquisition of online advertising company aQuantive, after admitting that the company it bought for $6.3bn (£4.01bn) in August 2007 is no longer generating revenues.
The massive non-cash, non-tax-deductible income statement charge reflects how Microsoft has struggled to make its online businesses compete against market leader Google.
In a statement, Microsoft explained how, although aQuantive "continues to provide tools" for Microsoft's internet advertising services, "the acquisition did not accelerate growth to the degree anticipated, contributing to the write-down."
It added: "While the Online Services Division business has been improving, the company's expectations for future growth and profitability are lower than previous estimates."
Although the statement also says that the company "does not expect this accounting write-down to affect its ongoing business or financial performance", analysts suggested otherwise.
The charge will be made against the company's fourth-quarter results for fiscal 2012.
Analysts polled by FactSet forecast that Microsoft will earn about $5.3bn (£3.4bn) for the quarter to the end of June, so the write-down will plunge the company into a paper loss for the quarter.
The aQuantive purchase is Microsoft's second most expensive acquisition, topped only by last year's buyout of Skype, for which it paid $8.5bn (£5.4bn).
In comparison, Google – which many believe Microsoft acquired aQuantive to compete with back in 2007 – bought online advertising firm DoubleClick in the same year for $3.2bn. Last year alone, Google collected $36.5bn (£23.3bn) in advertising revenue.