Microsoft Facebook

Microsoft swoops in to take over Skype for $8.5 billion but the price shocks some

Author

By The Drum Team, Editorial

May 10, 2011 | 3 min read

For some reason, the obvious buyer was never mentioned - now Microsoft has clinched its biggest buy yet

p.p1 {margin: 0.0px 0.0px 8.0px 0.0px; line-height: 19.0px; font: 13.0px Arial}But not everyone thought it was a great buy. Adweek described the $8.5 billion price tag as "shocking" adding sourly, "The weighty price tag has industry analysts skeptical of Skype’s actual worth. "The deal will bring Microsoft 660 million users from around the globe; it will also bring in $686 million in debt." The agreement has been approved by the boards of directors of both Microsoft and Skype, said Microsoft. "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," the company said. "The combination will extend Skype’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services."

With 170 million connected users and over 207 billion minutes of voice and video conversations in 2010, Skype has been a pioneer in creating rich, meaningful connections among friends, families and business colleagues globally.

Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.

“Skype is a phenomenal service that is loved by millions of people around the world,” said Microsoft CEO Steve Ballmer. “Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”

Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.

“Microsoft and Skype share the vision of bringing software innovation and products to our customers,” said Tony Bates. “Together, we will be able to accelerate Skype’s plans to extend our global community and introduce new ways for everyone to communicate and collaborate,” Bates said.

Speaking on behalf of the investor group that sold Skype to Microsoft, Egon Durban, managing director of Silver Lake, said: " We are excited about Skype’s long-term future with Microsoft, as it is poised to become one of the world’s most dynamic and comprehensive communications platforms.”

Founded in 2003, Skype was acquired by eBay in September 2005, and then acquired by an investment group led by Silver Lake in November 2009. The acquisition is subject to regulatory approvals and other customary closing conditions.

The buy is Microsoft’s biggest ever

Skype had been planning an initial public offering but delayed those plans last year, leading to rumours that it would be sold to Facebook, Google or Cisco Systems - but not Microsoft!
Microsoft Facebook

More from Microsoft

View all

Trending

Industry insights

View all
Add your own content +