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Microsoft Came to an Agreement to Buy Skype for $8.5 Billion

Microsoft Came to an Agreement to Buy Skype for $8.5 Billion

by Gustavo on May 10, 2011 · 0 comments · News


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Microsoft Corp. announced Tuesday that it came to agreement to buy the popular Internet phone service Skype for $8.5 Billion, the largest transaction in the 36 year history of the software maker.

The acquisition of Skype would give Microsoft a valuable communication tool in its bid to become a contender of greater weight in the internet and the growing market for multipurpose cell phones.

Skype Microsoft Purchase
Microsoft said it will join the Skype features to its Xbox game console, Outlook email and mobile Windows operating system. The company said Skype will continue in other computing platforms.

The main sellers are eBay Inc., and Silver Lake Financial Horowitz and Andreessen.

Some 170 million people use Skype services each month, although not all use it to make calls. Skype users accumulated 207,000 million minutes of voice and video last year.

Most people use Skype’s free phone service, making it difficult to make money by the company created in 2003 by Niklas Zennstrom and Janus Friis. About 8.8 million users per month, only 1% of the clientele base, use paid services.

Skype lost $7 million, with revenues of $860 million last year, according to documents filed by the company since it announced its intention to conduct an initial public offering of shares last year. Subsequently, the IPO was put on hold. The long-term net debt of Skype was $543,883 at the end of 2010.

The previous record for a Microsoft purchase was the aQuantive online service advertising, $6 Billion in 2007.

Microsoft said that Skype will be a new business headed by the CEO of Skype, Tony Bates, who will report directly to Microsoft CEO Steve Ballmer.

Microsoft earns billions with its software, but usually lose money on the internet, especially with its often vain attempt to catch Google Inc. in the search engines market.

eBay bought Skype for $2.6 Billion in 2005, but their attempt to attach the phone service with its online auction service was not successful. They eventually ended selling 70% of Skype to a group of investors led by Silver Lake Andreessen and Horowitz for $2 Billion 18 months ago.

The other major Skype shareholders are Joltid and the Board of Investment pension plans in Canada.




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