Microsoft Rumored To Be Buying Skype

May 10, 2011 by KATHY GILL, Technology Policy Analyst

According to the Wall Street Journal, Microsoft will announce an $8 billion purchase of Skype as soon as Tuesday.

A deal could be announced as early as Tuesday, people familiar with the matter said, though they cautioned that negotiations aren’t yet final and a deal could still fall apart. Including Skype’s long-term debt, the total value of the deal is about $8.5 billion.

Gigaom reported at midnight that the $8 billion cash deal was a wrap.

Here’s the 64-dollar question: if Microsoft does buy Skype, would you continue to use the service [poll]?

I remember when Skype was young and verboten (that was the rumor, anyway) on university networks because of the P2P nature of the service. This was long before its purchase by eBay in 2005. Four years later, eBay sold Skype to an investment group for “deal valuing the business at $2.75 billion.”

At GeekWire, Todd Bishop thinks the deal “makes sense” because of Microsoft’s enterprise communications reach.

I haven’t seen anyone explain how Skype’s value could have tripled in less than two years. And Microsoft’s last big acquisition — $6 billion for aQuantive (now Microsoft Advertising) — was criticized at the time:

I’ve been trying to find a way to illustrate just how screwy Microsoft’s $6 billion bid for aQuantive is, and here it is: For $6 billion in cash, Microsoft could have hired, in a single day, 60,000 engineers and salespeople (plus managers to make sure they earn their pay) – paying each one of them a $100,000 salary.

Of course, if Microsoft did that in one day everyone would think its executives had gone mad. After all, it already employs a modest 71,000 people around the world. Instead, it’s paying out $2.85 million for each of the 2,106 employees who work for aQuantive. Which, no matter how hard as people labor to rationalize this deal, is at the very least slightly more mad than that, if not good old-fashioned American bat-shit insanity.

Is this deal equally as bad?

See a list of Microsoft mergers and acquisitions.

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