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Microsoft Buys Skype – News Roundup

Nicole Kraft

Headlines are abuzz this morning with talk of Microsoft’s $8.5 billion Skype buy – their largest purchase to date.

While CNET describes Microsoft as “still a laggard on the internet,” they are hoping to capitalize on Skype’s 170 million connected users to broaden their reach. But it’s already apparent that this bold business decision is not going without strong opinions, namely in regards to whether or not they overpaid.

On the price issue, USA Today asserts that Microsoft is paying a hefty amount for Skype, “at 32 times last year's profit before interest, taxes and non-cash charges, especially considering that Skype's operating cash flow had been almost flat since 2008.”

But Microsoft is hoping that Skype will allow them to reign over key players in the market like Apple, Google and Facebook, some of which were recently rumored to be buying Skype prior to this announcement. The news is especially significant since Microsoft historically plays it safe in terms of mergers and acquisitions.

WIRED suggests that Microsoft’s own software already has considerable overlap with Skype. “Windows Live Messenger offers free instant messaging, and voice and video chat. It currently boasts around 330 million active users each month, typically with around 40 million online at any one moment.”

The deal could position both parties favorably in terms of two growing trends with Internet services – mobile and real world objects (like televisions). ReadWriteWeb insists this is where the future is heading, and that Microsoft will have the ability to help Skype make the jump to non-PC devices. And on the other end, it has potential to boost Microsoft’s online efforts, a place they notoriously struggle.

Marshall Kirkpatrick of ReadWriteWeb also outlines three fears and three hopes for the Microsoft/Skype deal, which seem to sum up the opinions of the masses. Fears include neglect of the product, neglect of the Mac version and malware, and hopes include disruption of the telephony landscape, Skype as one of the world’s biggest social networks and Skype as a developer platform.

It’s no question that this deal brings to surface a huge opportunity for Microsoft as well as for Skype; the question everybody is now asking is whether or not they will pull it off. Read more in the official press release.