Microsoft Buys Skype for $8.5 Billion!
Microsoft + Skype the result is:
Last night, before retiring to sleep I’ve been watching CNN News for the latest goings on and for current events. I was dumbfounded at the news that Microsoft plans to to buy Skype for no less than $8.5 billion. Commentators, internet analysts and all those who knew business well said it is a crazy idea….but not for Microsoft. They said that whatever the plan was, it was to kill the competition albeit the obvious criticisms.
For me, $8.5 bil is just too much. I personally do not think they could gain and profit on Skype for more than that amount of money. Aside from that, I’ve known that they would also shoulder Skype’s debts. That’s some serious desperate move to acquire such service and company.
In an article today by Nadia Damouni and Bill Rigby it said:
NEW YORK (Reuters) – Microsoft Corp plans to buy Internet phone service Skype for $8.5 billion in its biggest-ever acquisition, placing a rich bet on mobile and the Internet to try to best rivals such as Google Inc.
In a deal that took a month from offer to signing, the software company outbid Google and Facebook, which sources said offered to partner or buy Skype for $3 billion to $4 billion.
Microsoft’s interest in the money-losing, but popular service highlights a need to gain new customers for its Windows and Office software. Skype has 145 million users on average each month and has gained favor among small business users.
But investors expressed skepticism over the deal, sending Microsoft shares down 0.62 percent to $25.67. If those losses hold, the software giant’s market value — already exceeded by Apple Inc last year — will slip behind General Electric Co’s and begin to approach IBM’s.
Led by private equity firm Silver Lake, eBay Inc and other investors including the Canada Pension Plan Investment Board and Andreessen Horowitz, would make $5 billion, or three times their investment, a source familiar with the deal said.
Microsoft is putting more energy and resources into mobile and the Internet as the personal computer business underpinning its Windows and Office franchise appears to be under threat.
The Luxembourg-based company, which allows people to make calls at no charge, but has also developed premium services, would give Microsoft a foothold in the video-conferencing market as businesses shift to cheaper ways of communicating.
Skype delayed plans for an IPO that was expected to value the company at more than $3 billion. It looked tie-ups with Facebook and Google. Such a deal was expected to value Skype at $3 billion to $4 billion.
“It doesn’t make sense at all as a financial investment,” said Forrester Research analyst Andrew Bartels. “There’s no way Microsoft is going to generate enough revenue and profit from Skype to compensate.”
Click here for the full article.
Oh well, business is business. First was YouTube founders acquired Delicious from Yahoo, and now this.