Microsoft to Acquire Skype
 

http://kara.allthingsd.com/20110509/...orrow-morning/

Confirmed: Microsoft Will Announce Acquisition of Skype Tomorrow Morning

by Kara Swisher
Posted on May 9, 2011 at 8:14 PM PT

The Wall Street Journal reported earlier tonight that Microsoft–in what would be its most aggressive acquisition in the digital space–was zeroing in on buying Skype for $8.5 billion all in with an assumption of the Luxembourg-based company’s debt.

Sources told BoomTown tonight that the deal for the online telephony and video communications giant is actually done and will be announced early tomorrow morning.

The purchase–which has been spearheaded in a closely held negotiations by Microsoft CEO Steve Ballmer, with an assist from top dealmaker Charles Songhurst–is a bold move for the software giant and its biggest acquisition in more than three decades.

The big price will give Microsoft–which has struggled in its online efforts and has lost billions of dollars for its work–a big brand name on the Web.
With Skype, which has been aggressively expanding, Microsoft will continue to lose money in its Internet efforts. Skype lost $7 million on revenue of $860 million. Operating profits, which Skype preferred to highlight, were $264 million.

And–let us not forget–Skype’s debt is $686 million. Silver lining: That’s slightly less than Microsoft’s Online Services division losses in its most recent quarter!

But, sources said, the concept is bigger than just money, including getting access to Skype’s 663 million registered users.

Skype, which had been headed bumpily towards an IPO until now, will apparently be integrated into Microsoft’s Windows Live and other online communications efforts in both the consumer and enterprise arenas, sources said.

Think Kinect connecting.

Skype has had a big-company owner before–eBay Inc. paid $2.6 billion in cash and stock for it in 2005, as a way for the auction site’s buyers and sellers to communicate.

A 65 percent stake in Skype was sold in 2009 to investors such as Silver Lake Partners, Andreessen Horowitz, as well as the Canada Pension Plan Investment Board. It then valued Skype at $2.75 billion.

So, obviously, the deal is a big win for them. In addition, at the time they made their investments Skype was a huge legal mess with lawsuits flying.
Skype has since gotten cleaned up enough to attract Microsoft.

Other suitors have looked at Skype, including Google, although acquisition interest by Facebook was very much overblown, said several sources.
Interestingly, Microsoft’s new smartphone partner Nokia also held meetings with Skype’s CEO Tony Bates, a former Cisco exec who arrived at the company relatively last fall.

Interest in Skype by Microsoft was first reported by GigaOm’s Om Malik on Sunday.

Tune in at 5 am PT for the official press release, apparently, and lots and lots and lot of analysis of whether Microsoft paid too much for Skype.

Nokia?

They will be using MS' mobile OS.

whatever else happens, Skype will now be a money squeeze and general pain-in-the-ass per M$ SOP.

I don't get this move. They already have a messenger with voice/video. The only add-on here would be the tie-in to traditional land line phones. Maybe Microsoft is going to try and compete with Google Voice? If that's the case fine, but $8.5B to get some telco relationships is a mighty hefty price to pay. Seems like a major swing and miss to me.

One problem Microsoft has is that they're so used to lying in wait, looking at the up and coming markets and players, then when something looks like a sure thing they step in and either buy a player or throw a ton of weight behind their own product. That game-plan won't work anymore for two reasons. First, they're no longer the big fish in the pond. Apple and Google can outspend them. Second is the raw speed this industry moves at now. By the time Microsoft finds a player and a market the market is already matured to the point nobody wants the Microsoft version that's a Johnny-come-lately.

http://img.imgur.com/yvtdc.png

just sayin

:clap::clap::clap:


One of the best posts I've read on this board in quite some time.

Don't take that post the wrong way. I make pretty good money wrangling with Microsoft's products. I like the fact that they're slightly dysfunctional.

LMAO

Money.

Apparently Microsoft was WAY over anyone else on the value of this thing. Ouch.

http://eu.techcrunch.com/2011/05/10/...y-4-5-billion/

They're not buying the product. They're buying the user base.

Per wikipedia, Skype today has over 600 million registered users.

And $775M in debt servicing them.