Skype, the Internet communications company, is being bought by Microsoft for $8.5 billion. The software giant says, "The acquisition will increase the accessibility of real-time video and voice communications, bringing benefits to both consumers and enterprise users and generating significant new business and revenue opportunities." Of course, Wired notes that this is "the second time Skype has been bought out; after being started in 2003, it was purchasd by eBay in 2005 for $3.1 billion. eBay then sold the majority of its stake in 2009 to a private investment group for $1.2 billion less than it paid."
Skype's 2010 revenue was $860 million, but had a $7 million loss and has nearly $700 million in debt (which Microsoft will assume). According to GigaOm, which first broke the news, Skype investors (such as eBay) were pushing for a sale, and apparently rumors that Google and Facebook were interested suitors may have pushed Microsoft to act: "The biggest winner of this deal could actually be Facebook. The Palo Alto-based social networking giant had little or no chance of buying Skype. Had it been public, it would have been a different story. With Microsoft, it gets the best of both worlds — it gets access to Skype assets (Microsoft is an investor in Facebook) and it gets to keep Skype away from Google."
Dealbook breaks down what the deal means for Microsoft:
The acquisition would be Microsoft’s largest ever and it is the software giant’s effort to gain a foothold in the world of voice and video communications. Microsoft would be able leverage Skype’s more than 600 million registered users into using its other products. For example, it could be connected to Microsoft’s Xbox 360 and Kinect systems, and integrated into the company’s flagship product, Office, as a way for business users to better collaborate.
It could also help Bing, its search engine, which competes with Google. It may also help bolster Microsoft’s fledging mobile telephone offering, which lags far behind Apple’s iOS and Google’s Android operating systems. The deal would end months of speculation in Silicon Valley about Skype’s future. The company had been planning an initial public offering but delayed those plans last year, leading to persistent rumors that it would be sold to another technology giant like Facebook, Google or Cisco Systems.
Skype's CEO Tony Bates will be President of the Microsoft Skype Division and report directly to Microsoft's Steve Ballmer.
