Microsoft Corp. (Nasdaq: “MSFT”) and Skype Global S.à r.l today announced that they have entered into a definitive agreement under which Microsoft will acquire Skype, the leading Internet communications company, for $8.5 billion in cash from the investor group led by Silver Lake. The agreement has been approved by the boards of directors of both Microsoft and Skype.
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 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.
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 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.
The acquisition is subject to regulatory approvals and other customary closing conditions. The parties hope to obtain all required regulatory clearances during the course of this calendar year.
Om Malik has some perspective on why Skype’s owners were anxious for it to be sold and suggests that if Microsoft does not botch the acquisition, the big winner could be Facebook (who already has a relationship with Microsoft) and that a joint announcement could be expected shortly. Still, the big question is how the acquisition will work out, including how much of the Skype team will stay with Microsoft and the basic economics of the Skype service which has already suffered through a failed acquisition by eBay:
Despite its popularity, the service has struggled to maintain profitability. Since most of its services are free, Skype makes much of its income from a small group of users who pay for long distance calls to telephone numbers. In 2010, Skype recorded $859.8 million in revenue but reported a net loss of $7 million, according to a filing.
Microsoft’s deal-making history is mixed. The company has often been an smart acquirer of start-ups and smaller companies, analysts say, picking off technical teams that are then folded into products likes Windows, Office and Internet Explorer. But during Mr. Ballmer’s tenure as chief executive, beginning in 2000, the company has also made far larger, riskier bids, most of which have been viewed as unsuccessful.
In 2005, eBay bought Skype for $2.6 billion with hopes of tightly integrating the service as a sales tool. But the deal never lived up to its promise and eBay took a $1.4 billion write-down on its investment.
I’m frankly a bit dubious about the success or at least profitability of this acquisition since Skype doesn’t even seem to be a side dish, but more of a garnish on Microsoft’s plate and a very expensive garnish at that.
Just like their Live Search Club , Microsoft’s Live Search cashback incentive program has drawn some "entrepreneurs":
That’s right, $630 in cash can be yours for $714. But if you access the page through a Live Search ad link that returns 35 per cent of the purchase price, you can make up the difference. And then some. So you make a profit, and so does the seller. At the expense of Microsoft and eBay.
Hit the link for further details as it is not clear that Microsoft is actually offering 35% anymore, but this was as inevitable as death and taxes.
Microsoft Corp. is developing on an online payment system that will be cheaper than credit card transactions, making it possible for companies to charge small fees for Web-based content and services they now offer for free.
Microsoft Chairman Bill Gates told a breakfast meeting here at the World Economic Forum that he reviewed a plan to enter the online payments business during his “think week,” a twice-yearly ritual where he usually isolates himself in a backwoods cabin to study new ideas.
Gates described a system that would undercut credit card fees, making it profitable for an online newspaper to charge small fees for individual articles, for example.
“If you want to charge somebody $0.10 or $1 a month, that will just be a click…you won’t have to manage some funny thing or pay some big credit charge, where half of it goes to the clearing,” Gates said.
What Mr. Gates describes is a micropayments system rather like Microsoft Points which started out as the popular “currency” of the Xbox Live Marketplace, but since has spread to the Zune Marketplace and general merchandise. Heck, maybe it is Microsoft Points. In any case, the report will give the folks at eBay’s PayPal and Google Checkout something to think about.
There seems to be a shortage of real Microsoft news today, but there’s no shortage of rumors:
The Microsoft acquisition of Yahoo rumor is back again. Or is it Yahoo buying AOL? Or merging with eBay or buying Facebook or…? The variants are seemingly as endless as Yahoo’s perceived problems.
For a brief while Windows Vista RTM was imminent today, but the definitive rumor remains Paul Thurrott’s prediction of a just in time delivery on November 8. For humor there’s also the cyclical theory of Microsoft operating system quality which indicates that Vista may be doomed from the start (via Enterprise OpenSource Magazine).
News is filtering out that Steve Sinofsky, Senior Vice President, Windows and Windows Live Engineering, is orchestrating another reorg at MSN and Windows Live.
One reason for the delay is that Microsoft doesn’t yet have a European product czar for the Zune to coordinate a launch. And the recently appointed figurehead for Zune International is just now working to build up relationships in region. Even more telling is that fact that Microsoft’s doesn’t yet have an infrastructure in place in Europe to provide music online. “We haven’t yet selected a music store provider to build marketplace in the UK, which means we’re way off launch,” said Dene Schonknecht, media and entertainment alliance manager for Microsoft.
and via the same source since no list of rumors is complete without one involving Apple, Apple iPhone Speculation Reaches Fever Pitch. It’s supposedly coming in January.