In August 2010, Skype filed to go public, expecting to raise $1 billion, but not long after appointing a new CEO, former Cisco SVP Tony Bates, the company put its IPO plans in the freezer while it looked for ways to generate more revenue from the popular service. There’s no doubt it’s a big brand on the Web (with both consumer and enterprise appeal, worldwide at that), and is poised to keep mattering in the next decade and beyond. Skype digitally connects dozens of millions of people on a daily basis, enabling them to communicate with each other through voice calls, chat messages and video conferencing. As always with these things, the many tech industry pundits and analysts will look at this deal from all possible angles and then some, and still only a handful will end up being somewhat accurate when we look back in a couple of years.įrom a non-financial point of view, the acquisition makes a ton of sense today, though. The $8.5 billion question: did Microsoft overpay for Skype? The deal was first reported by GigaOM‘s Om Malik (he does that sometimes) and later confirmed by the Wall Street Journal, who cited people familiar with the matter. Skype will become a new business division within Microsoft, and its current chief executive Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Microsoft CEO Steve Ballmer. The agreement has been approved by the boards of directors of both Microsoft and Skype. The purchase price includes the assumption of Skype’s debt. In fact, this is Microsoft’s biggest financial bet to date in terms of M&A, trumping its $6 billion+ purchase of aQuantive, which dates back to May 2007, in size. Microsoft is buying Skype for $8.5 billion in cash in its first sizeable acquisition since August 2008, when the Redmond software giant spent $486 million on Greenfield Online.
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