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RIP Skype

Started by Tonitrus, May 10, 2011, 02:48:34 AM

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Tonitrus

QuoteMicrosoft nears Skype deal
Microsoft is nearing a deal to buy Skype, an Internet phone company, for $7 billion to $8 billion, according to a report online Monday night...

By Sharon Pian Chan
Seattle Times technology reporter

Microsoft is nearing a deal to buy Skype, an Internet phone company, for $7 billion to $8 billion, according to a report online Monday night in The Wall Street Journal.

The report, citing unidentified sources, said a deal could be announced Tuesday.

Microsoft declined to comment.

Speculation about a possible deal stirred earlier in the day Monday on various technology blogs.

An agreement to acquire Skype, one of the more recognizable brands on the Internet, would come at a time Microsoft struggles to gain more traction in the consumer market, where rivals, notably Google and Apple, have grabbed increasing attention and market share.

At $8 billion, Skype would be Microsoft's largest acquisition. Four years ago, it bought aQuantive, a Seattle online advertising company, for $6 billion.

Skype is an online phone and video-calling service for PCs and other Internet-connected devices. It says an average 124 million people use the service monthly.

For many users, Skype is replacing both landline and mobile phones because local and even international calls are cheap or free. It also makes an iPhone app for placing video calls.

Microsoft makes unified communication software called Lync, which is designed to replace traditional phone systems for businesses.

The software handles phone calls, instant messaging, conference phone calls and video conferencing.

Luxembourg-based Skype was started in 2003 by Niklas Zennstrom and Janus Friis, developers of Kazaa, a sometimes controversial file-sharing technology that enabled users to share songs through the Internet.

In 2005, eBay purchased Skype for $2.6 billion and stock.

But the auction site two years later took a $1.4 billion charge on the investment and sold a 70 percent stake to a consortium of technology investors, including Silver Lake Partners, Index Ventures and Andreessen Horowitz.

Grey Fox

Everyone made good return on investment in that venture, eh.
Colonel Caliga is Awesome.

Lucidor

Bought it to shut it down?

derspiess

This is a good thing.  My in-laws always want to use Skype to video chat, while it's easier for me just to fire up the Xbox & launch Video Kinect. 
"If you can play a guitar and harmonica at the same time, like Bob Dylan or Neil Young, you're a genius. But make that extra bit of effort and strap some cymbals to your knees, suddenly people want to get the hell away from you."  --Rich Hall

Caliga

 :huh: Seems like a dumb move on Microsoft's part.  I shall go mock my brother now (who owns a bunch of MSFT).
0 Ed Anger Disapproval Points

garbon

Quote from: Caliga on May 10, 2011, 02:44:56 PM
:huh: Seems like a dumb move on Microsoft's part.  I shall go mock my brother now (who owns a bunch of MSFT).

Acquiring the competition?
"I've never been quite sure what the point of a eunuch is, if truth be told. It seems to me they're only men with the useful bits cut off."
I drank because I wanted to drown my sorrows, but now the damned things have learned to swim.

derspiess

Quote from: garbon on May 11, 2011, 09:18:35 AM
Quote from: Caliga on May 10, 2011, 02:44:56 PM
:huh: Seems like a dumb move on Microsoft's part.  I shall go mock my brother now (who owns a bunch of MSFT).

Acquiring the competition?

I'm guessing he means paying too much.  They're paying a lot more than ebay did for it, but then again it makes a lot more sense for MSFT to own Skype than it did for ebay.
"If you can play a guitar and harmonica at the same time, like Bob Dylan or Neil Young, you're a genius. But make that extra bit of effort and strap some cymbals to your knees, suddenly people want to get the hell away from you."  --Rich Hall

MadImmortalMan

Quote from: Caliga on May 10, 2011, 02:44:56 PM
:huh: Seems like a dumb move on Microsoft's part.  I shall go mock my brother now (who owns a bunch of MSFT).


You should have been mocking him a long time ago for owning that dog stock. I refuse to buy it until Ballmer is gone.
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

Caliga

Oh, don't worry... I mocked him when he first bought it. :cool:
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OttoVonBismarck

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.

Barrister

Quote from: OttoVonBismarck on May 11, 2011, 01:37:23 PM
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.

Apple comes under a lot of criticism for NOT making large aquisitions, and instead sitting on too much cash.
Posts here are my own private opinions.  I do not speak for my employer.

derspiess

Quote from: OttoVonBismarck on May 11, 2011, 01:37:23 PM
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.

While I don't necessarily disagree that they overpaid, that's a shortsighted way to view Skype's value.  It's not as if only the current paying customers are ever going to bring in revenue in the future.  The currently non-paying customers could become induced into some sort of pay service or could bring in ad revenue. 

Not to mention the value of the Skype's technology & patents ;)
"If you can play a guitar and harmonica at the same time, like Bob Dylan or Neil Young, you're a genius. But make that extra bit of effort and strap some cymbals to your knees, suddenly people want to get the hell away from you."  --Rich Hall

MadImmortalMan

My favorite would be Google's repeated attempts to sell to Yahoo for like $1B back in the 90s. What a wasted opportunity that one was.  :P
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

Josquius

I'm more worried for RIP msn.
Some sort of merger on the cards eventually? Doesn't make sense to keep the two IM services...
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Zanza2

Quote from: Barrister on May 11, 2011, 01:39:47 PM
Apple comes under a lot of criticism for NOT making large aquisitions, and instead sitting on too much cash.
They will start making silly acquisitions once their business starts to stagnate. It's what they all do. Just look at Microsoft... ;)