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Microsoft Acquires Skype for $8.4 Billion

It’s been just over two years since Skype and its old parent company eBay parted ways and it certainly wasted no time in finding a new buyer. Microsoft and Skype today announced a deal that would see the former acquire Skype from investor group Silver Lake for $8.5 billion in cash. We don’t need to tell you that $8.5 billion is a significant amount of cash, but as a price for Skype, it’s also going to shock a lot of people.

You see, in 2005, the company was sold to eBay for $2.6 billion, a price eBay felt was more than fair for a popular but still relatively small service that was expected to explode at any moment. Unfortunately for both companies, the partnership didn’t quite work out as planned. Skype grew, but slowly, and eBay didn’t really seem to know what to do with it. In April of 2008, just three years after its big purchase, eBay’s president and CEO John Donahoe said it would spend a year evaluating Skype before making any decisions about the company's future.

Fast forward a year and eBay announces plans to separate from Skype. In November of 2009, the online auction site sold Skype for approximately $1.9 billion in cash and a note from the buyer, Silver Lake Partners, in the principal amount of $125 million. TechCrunch reports that Skype filed IPO plans in August of 2010 and expected to raise $1 billion (its revenue in 2010 was $860 million). However, IPO plans were put on the backburner soon after the company’s new CEO, Tony Bates, was hired. That brings us to today's deal, which has already been approved by both boards of directors. Skype will become a new business division within Microsoft, and Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.

With a company like Microsoft behind it, Skype has huge potential and, unlike eBay, it seems Redmond is excited to mix the service up with existing products and services. The press release sent out this morning indicated that Skype would support an array of Microsoft devices, including Xbox, Kinect, Windows Phone 7 phones and Windows computers. For its part, Microsoft will connect users with Xbox Live, Outlook and Lync, among others.

"Skype is a phenomenal service that is loved by millions of people around the world," said Microsoft CEO Steve Ballmer. "Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world."

Who’s ready for Kinect and Skype?

  • sseyler
    I'm ready... I think.
    Reply
  • gokanis
    Poor Skype.
    Reply
  • NuclearShadow
    reporting directly to Ballmer.

    That must be quite the scary experience having to report to the devil himself.
    Reply
  • COLGeek
    It would be a shame if the "MS good idea fairies" ruined an otherwise useful product. Skyping has become a part of the greater 'Net lexicon (much like "googling"). I hope Skype doesn't become yet another bloated, less than useful MS product....It will also be interesting to see how this impacts the Open Source communities.
    Reply
  • back_by_demand
    NuclearShadowThat must be quite the scary experience having to report to the devil himself.They were bought by Microsoft, not Apple

    OK let's see this get integrated into all Windows products then see Google go crying to the DoJ because Google Talk isn't getting any love.
    Reply
  • RogueKitsune
    Too bad M$ is probably gonna run Skype into the ground. Then after a year of there being no "Skype" release i product like Skype(that they claim they developed all on their own), but you have to pay for everything and sucks in comparison....because that is what M$ is good at. Taking an idea, claim it as their own hard work, make it worse and charge lots of money for it.
    Reply
  • matt_b
    Microsoft has been on a roll with the motto - we haven't been able to reinvent ourselves for decades - so we'll buy up whatever seems to be doing well. Seriously, how many innovations have they created compared to blunders (especially on the hardware side) - now compare that number to company acquisitions.
    Reply
  • Maxor127
    back_by_demandThey were bought by Microsoft, not AppleOK let's see this get integrated into all Windows products then see Google go crying to the DoJ because Google Talk isn't getting any love.Fankid.
    Reply
  • Tomtompiper
    Ah well I and my family will just have to find a new VOIP provider, what a pity.
    Reply
  • Zingam
    gokanisPoor Skype.
    I don't care about Skype but I care about their user base. More appropriate would be: Poor users!
    I really want to ditch Skype now if I can.back_by_demandThey were bought by Microsoft, not AppleOK let's see this get integrated into all Windows products then see Google go crying to the DoJ because Google Talk isn't getting any love.
    Apple? Oh, come on! Apple is so far from being global company in every home.

    Microsoft is the devil: they are everywhere and they've ruined the PC experience for 30 years for billions of users with their overpriced wincraps! They've ruined so many good companies with their monopoly and they've wasted trilions of manhours of people trying to fix their crappy OSes full of bugs and viruses.
    Apple is no way near such dominaton and evil. Where you live you hardly see Apple products but yesterday I had to wait in line for half an hour in a government department waiting for the admins to reboot the Win2003 server.



    Reply