Microsoft – Skype’s $8.5 Billion deal

Microsoft buys Skype at $8.5 billion dollars in an all cash deal. This deal is already confirmed by Wall Street and will be the headline soon as Steve Ballmer and Skype CEO Tony Bates will be hosting a press conference in a few hours from now.

Skype was up for sale for quite sometime, with likes of companies like Google and Facebook already in the race. Microsoft who was a late entrant will be walking away with the cheery, cake and all the toping.

Few question that might be already out and around, which needs to be answered?


All about Skype sale: Skype was planing to go public with IPO offering that could have resulted in billion dollar deal. But as their strategic investor/partners wanted to seal the profits earned as there were rumors stating the revenues for Skype had stalled. So Silver Lake and eBay wanted to close it and walk out.

About other bidders: To keep it simple, Microsoft was serious about Skype given the possibilities and prospects. The other bidders were Google (who offered $4 billion) and Facebook (if it had been a public company, then we could have expected a different outcome).

What does Microsoft earn from this deal?

:- Boost in the enterprise collaboration market with its voice, video and sharing capabilities, especially when competing with Cisco and Google.
:- Working relationship with carriers who are looking to partner with Skype as they start to transition to LTE-based networks, there by boosting real-time communication strategy.
:- An application/service for the future versions of Windows Mobile operating system.
:- A competitive offering against Google Voice and Apple’s Facetime (an emerging communication platform).
:- Skype will be able to support XBox and Kinetic development.

Who caught the big fish?

Though Microsoft sealed its biggest ever acquisition, the winner might just be one of the most lucrative online company and one of the bidders, Facebook. Microsoft is an investor in Facebook ($15 billion worth), with Skype they are able to keep Skype away from Google.

My statement shouldn’t contradict the fact that yes Microsoft will be able to get a large piece of the cake also by also getting Skype’s assets. Skype has approx. 600 million customer base and now with this acquisition, both Microsoft and Facebook will benefit.

Facebook badly needed Skype for one reason, to improve the real-time communication possibilities for its Social networking site. Skype’s peer-to-peer network to offer voice and video facilities.

About Microsoft’s move?

It was this morning when it was announced that Apple is the number 1 IT company, would have been a great set back for Microsoft. As they have struggled when Apple was continuously developing to get to that position.

But with this move, it’s pretty obvious. Microsoft will not bow out that easily, with this latest acquisition they will venture into online/real-time communication which has stalled their progress for quite sometime now.

Source: gigaom
Img. source: ciberwolf

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About aropkp

My world around me, what I see and what we all see, is always from a different perspective. The more we share the more we know. The more we commit in doing it the more we learn. "We can't so well learn from others mistakes, so make a few of your own"

Posted on May 10, 2011, in Acquistions, Mergers and tagged , , , , . Bookmark the permalink. Leave a comment.

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