RIP Skype

[DGuller]

Because of the nature of their business technology companies are one of the (if not the) most prone-non banking companies to generate large amounts of cash. For that reason you see tech companies making big "bets" on acquisitions like that, because holding massive reserves of cash actually has little real value for a stock holder. Microsoft is not only the most profligate when it comes to doing this, it is also arguably the company that is least successful in its bets. However Apple and Google certainly have some similar purchases they've made that essentially made no sense at all. This one probably takes the cake though, $8.5bn values each of Skype's paying customers at something like $2,000. When they spend on average $40/yr on the service.

You can always use the cash to buy back stocks.    Burning the shareholders' cash has even less value for the shareholders than holding it.

[MadImmortalMan]

You can always use the cash to buy back stocks.    Burning the shareholders' cash has even less value for the shareholders than holding it.

Better to boost dividends.

[DGuller]

You can always use the cash to buy back stocks.    Burning the shareholders' cash has even less value for the shareholders than holding it.

Better to boost dividends.

Either one is about the same in theory, although practical considerations like taxation or dividend stability may drive it one way or another.  In any case, the point is that shareholders would definitely not prefer to have management build empires out of boredom with spare cash.