NOTES TO FINANCIAL STATEMENTS
NOTE 8 ACQUISITIONS
On August 10, 2007, we acquired all the outstanding shares of aQuantive, Inc. (aQuantive) for $5.9 billion, which was paid primarily in cash. Headquartered in Seattle, Washington, aQuantive is a digital marketing business that we expect will play a key role in the future development of our Online Services Business. We also believe the acquisition will help us build and support next-generation advertiser and publisher solutions in environments such as cross media planning, video-on-demand, and Internet protocol television. aQuantive was consolidated into our results of operations starting August 10, 2007, the acquisition date.
As a result of the aQuantive acquisition, we recorded $5.2 billion of goodwill in our Online Services Business. Of the $939 million of acquired intangible assets, $24 million was assigned to in-process research and development assets and was expensed. The remaining acquired intangible assets include $476 million of customer relationships with a weighted average life of six years, $327 million of technology-based intangible assets with a weighted average life of four years, and $112 million of other intangible assets with a weighted average life of five years.
On April 24, 2008, we acquired all the outstanding shares of Fast Search & Transfer ASA (FAST) for $1.3 billion, which was paid primarily in cash. Headquartered in Oslo, Norway, FAST is an enterprise search company that we expect will broaden our enterprise search technology product offerings to businesses and will enable innovation in related areas such as our portal and content management. FAST was consolidated into our results of operations starting April 24, 2008, the acquisition date.
As a result of the FAST acquisition, we recorded $981 million of goodwill in our Microsoft Business Division. Of the $266 million of acquired intangible assets, $35 million was assigned to in-process research and development assets and was expensed. The remaining acquired intangible assets include $27 million of customer relationships with a weighted average life of seven years, $134 million of technology-based intangible assets with a weighted average life of five years, and $70 million of other intangible assets with a weighted average life of six years.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the dates of the aQuantive and FAST acquisitions:
| (In millions) | aQuantive as of August 10, 2007 |
FAST as of April 24, 2008 |
|---|---|---|
| Cash and cash equivalents | $ )342 | $ ,91 |
| Accounts receivable, net | 273 | 46 |
| Other current assets | 6 | 7 |
| Property, plant and equipment | 50 | 30 |
| Intangible assets | 939 | 266 |
| Goodwill | 5,189 | 981 |
| Deferred income taxes | 179 | – |
| Other long-term assets | 7 | 5 |
| Total assets acquired | $6,985 | $1,426 |
| Accrued compensation | 37 | 39 |
| Other current liabilities | 683 | 38 |
| Deferred income taxes | 338 | 65 |
| Other long-term liabilities | 70 | 10 |
| Total liabilities assumed | $1,128 | $ )152 |
| Net assets acquired | $5,857 | $1,274 |
In addition to aQuantive and FAST, we acquired 19 other entities during fiscal year 2008 for total consideration of $1.6 billion which was paid primarily in cash and included:
- Danger, Inc. (Danger), a software-as-a-service company that provides mobile operators with an integrated end-to-end solution to deliver mobile data and Internet services to their subscribers. We acquired Danger for approximately $500 million in cash; and
- 18 other entities specializing in areas such as application security, desktop, and advertising solutions.
As a result of our acquisition of Danger and the 18 other entities, we recorded $1.2 billion of goodwill. In addition, $37 million was assigned to in-process research and development assets and was expensed. All of the entities have been consolidated into our results of operations since their respective acquisition dates. The purchase price allocations for these acquisitions are preliminary and subject to revision as more detailed analyses are completed and additional information about fair value of assets and liabilities becomes available. Any change in the estimated fair value of the net assets of the acquired companies will change the amount of the purchase price allocable to goodwill. Pro forma results of operations have not been presented because the effects of Danger and the 18 other acquisitions, individually and in aggregate, were not material.