Author Topic: Microsoft to buy Internet phone service Skype for $8.5 billion  (Read 1752 times)

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Offline z_randy

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NEW YORK — Microsoft Corp. said Tuesday that it has agreed to buy the popular Internet telephone service Skype SA for $8.5 billion in the biggest deal in the software maker’s 36-year history.

Buying Skype would give Microsoft a potentially valuable communications tool as it tries to become a bigger force on the Internet and in the increasingly important smartphone market.

Microsoft said it will marry Skype’s functions to its Xbox game console, Outlook email program and Windows smartphones. The company said it will continue to support Skype on other software platforms.

The sellers include eBay Inc. and private equity firms Silver Lake and Andreessen Horowitz.

About 170 million people log in to Skype’s services every month, though not all of them make calls. Skype users made 207 billion minutes of voice and video calls last year.

Most people use Skype’s free calling services, which has made it difficult for the service to make money since entrepreneurs Niklas Zennstrom and Janus Friis started the company in 2003. An average of about 8.8 million customers per month, or just over 1 percent of the user base, pay to use Skype services.

Skype lost $7 million on revenue of $860 million last year, according to papers that the company has filed since announcing its intentions last summer to launch an initial public offering of stock. The IPO was later put on hold. Skype’s long-term debt, net of cash, was $543,883 at the end of 2010.

The Skype takeover tops Microsoft’s biggest previous acquisition — a $6 billion purchase of the online ad service aQuantive in 2007.

Microsoft said Skype will become a new business division headed by Skype CEO Tony Bates, who will report directly to Ballmer.

Although it makes billions from its computer software, Microsoft has been accustomed to losing money on the Internet in a mostly futile attempt to catch up to Google Inc. in the lucrative online search market. Microsoft got so desperate that it made a $47.5 billion bid to buy Yahoo Inc. three years ago, but withdrew the offer after Yahoo balked. Yahoo is now worth about half of what Microsoft offered.

Microsoft would be Skype’s second large-company owner. EBay bought Skype for $2.6 billion in 2005, but its attempt to unite the phone service with its online shopping bazaar never worked out. It wound up selling a 70 percent stake in Skype to a group of investors led by private equity firms Silver Lake and Andreessen Horowitz for $2 billion 18 months ago.

Besides eBay, Silver Lake and Andreessen Horowitz, Skype’s other major shareholders are Joltid and Canada Pension Plan Investment Board.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

http://www.washingtonpost.com/business/report-microsoft-near-deal-to-buy-internet-phone-service-skype-for-about-85-billion/2011/05/09/AFLWjYdG_story.html?tid=sm_facebook



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Offline keetedw

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Re: Microsoft to buy Internet phone service Skype for $8.5 billion
« Reply #1 on: May 10, 2011, 01:22:02 PM »
Sweet!  Video chat in Skype via the Kinect!
 

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Offline Big daddy Eis

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Re: Microsoft to buy Internet phone service Skype for $8.5 billion
« Reply #2 on: May 11, 2011, 09:09:31 PM »
awesome

Offline Frobozz

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Re: Microsoft to buy Internet phone service Skype for $8.5 billion
« Reply #3 on: May 11, 2011, 09:52:33 PM »
This deal makes no sense to me.   The vast majority of Skype users are free users and no one has shown tha they have a tolerance of advertising in the GUI should M$oft go that route for revenue. 


 

Offline keetedw

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Re: Microsoft to buy Internet phone service Skype for $8.5 billion
« Reply #4 on: May 12, 2011, 01:51:28 AM »
I don't think it has as much to do with ad revenue as it does having a successful video and voice chat/phone application that could be implemented everywhere.

Skype still makes money from calls with Minute fees, monthly fees, sms fees and some premium services, I believe.

I tend to think they're smart enough to leave it ad free, aside from the big M$ stickers they'll put all over it.
 

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Offline Frobozz

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Re: Microsoft to buy Internet phone service Skype for $8.5 billion
« Reply #5 on: May 12, 2011, 07:58:03 AM »
This is why we should be scared of this merger:


 

Offline z_randy

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Re: Microsoft to buy Internet phone service Skype for $8.5 billion
« Reply #6 on: May 12, 2011, 09:03:39 AM »
I don't think it has as much to do with ad revenue as it does having a successful video and voice chat/phone application that could be implemented everywhere.
I think that's exactly what it is.  It puts them in the game with google and Apple.  Why develop it when you can buy it?



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Offline Frobozz

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Re: Microsoft to buy Internet phone service Skype for $8.5 billion
« Reply #7 on: May 12, 2011, 09:14:39 AM »
This just makes me wonder if Skype will die a slow death like ICQ did in the late '90s after AOL bought it.


 

Offline Morpheus

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Re: Microsoft to buy Internet phone service Skype for $8.5 billion
« Reply #8 on: September 08, 2011, 10:06:26 AM »
Very true Fro......I used to use ICQ on the regular......

 



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