Microsoft close to acquiring Skype: Report

PTI New York | Updated on March 12, 2018 Published on May 10, 2011

Microsoft Corp is nearing a deal to buy internet phone firm Skype Technologies for between $7 billion and $ 8 billion — the most aggressive move yet by the software giant to play in the increasingly converged worlds of communication, information and entertainment.

“Microsoft Corp is close to a deal to buy Internet phone company Skype Technologies SA for between $7 billion and $8 billion,” The Wall Street Journal reported.

The report further said that including Skype’s long-term debt, the total value of the deal amounted to $8.5 billion.

A deal could be announced as early as today, the report said, citing people familiar with the matter.

Skype, was launched in 2003 by Niklas Zennstrom and Janus Friis, who has also created a file-sharing technology called Kazaa that became widely associated with music piracy.

While Skype was initially popular with techies, it increasingly worked its way into the mainstream by offering free or cheap phone calls, which were especially appealing to international callers.

Online market place eBay Inc acquired Skype in 2005 for $2.6 billion. In 2009, eBay sold a 70 per cent stake in Skype to an investor group that included Silver Lake and Andreessen Horowitz for nearly $2 billion. It retained about a third of the company.

The report said that buying Skype — a service that connects millions of users around the world via Internet-based telephony and video — would give Microsoft a recognised brand name on the Internet at a time when it is struggling to get more traction in the consumer market.

The Skype deal would rank as the biggest acquisition in the 36-year history of Microsoft, a company that traditionally has shied away from large deals.

Last year, Skype posted revenues of $860 million and $264 million in operating profits, but still had a loss of $7 million. The company had $686 million in long-term debt as of December.

Published on May 10, 2011
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