Microsoft is absorbing a 6.2 billion US dollar (£3.9 billion) charge to reflect its inability to produce more revenue from an online advertising service that it bought nearly five years ago.
The non-cash charge could saddle Microsoft with a loss for its fiscal fourth quarter ending in June.
Analysts polled by FactSet had predicted Microsoft would earn about 5.3 billion dollars (£3.3 billion) for the period. Microsoft is scheduled to release its latest quarterly results on July 19.
The software maker blamed the setback primarily on the disappointing performance of aQuantive, an online advertising service that it bought in 2007 for 6.3 billion dollars (£4 billion). It was the most expensive acquisition in the company's 37-year history at the time, surpassed only by the 8.5 billion dollar (£5.4 billion) purchase of Skype last year.
The charge represents Microsoft's sobering acknowledgement that aQuantive did not increase the company's online advertising revenue as much as management had anticipated.
Since it bought aQuantive, Microsoft's online division has reported losses totalling nearly 9 billion dollars (£5.7 billion).
The disheartening performance comes as internet search leader Google is expanding its online advertising empire, despite Microsoft's attempts to lure away web surfers and marketers.
Google's success has flowed, in part, from its 3.2 billion dollar (£2 billion) acquisition of DoubleClick, an online advertising service that used to compete against aQuantive. Google last year earned 9.7 billion dollars (£6.2 billion) on nearly 38 billion dollars (£24 billion) in revenue, with most of the money coming from online ads.