Microsoft Corp. (MSFT) agreed to buy Skype Technologies SA for $8.5 billion in cash to gain the world’s most popular Internet calling service and its 663 million customers.
Microsoft will acquire Luxembourg-based Skype from an investor group led by Silver Lake, the companies said in a statement yesterday. The agreement was approved by the boards of directors of both companies. The takeover may help Microsoft Chief Executive Officer Steve Ballmer attract Web users and narrow Google Inc. (GOOG)’s lead in Internet advertising. The acquisition is Redmond, Washington- based Microsoft’s largest, surpassing the purchase of AQuantive Inc. for about $6 billion in 2007.
more"This could give Microsoft a much-needed kick-start" in telecommunications, said Paolo Pescatore, an analyst at CCS Insight in London. In voice services, "Skype has certainly set the benchmark and gained a lot of traction."
A purchase by Microsoft would divert Skype from a plan, announced in August, to sell $100 million of shares in an initial public offering. The company has struggled to convert users of its free PC-to-PC phone services into paying customers, according to a March regulatory filing.
Microsoft, the world’s largest software maker, slipped 1.8 percent to the equivalent of $25.58 at 2:06 p.m. in German trading. The stock fell 4 cents, or 0.2 percent, to $25.83 yesterday in Nasdaq Stock Market composite trading, extending the stock’s decline to 7.5 percent this year.
The price includes net debt, a person familiar with the matter said. Skype reported about $775 million in debt, along with a revolving credit line of $30 million, in a filing in April.
Ballmer is aiming to revive Microsoft’s online services division, which had an operating loss of more than $700 million in the three months that ended in March. The company lags behind Google in Web search and related advertising.
"Microsoft has a lot of areas in its overall Internet business that it could be working on, and whether the acquisition of Skype is the key silver bullet that fixes all of that remains to be seen," said Kunal Bajaj, head of telecommunications consulting firm Analysys Mason India Pvt. in New Delhi. "People go to Skype to make phone calls, and there isn’t much else in social networking, instant-messaging and status updates and things like that." (Newsnow.lk)
