Microsoft buys Skype for $8.5 billion

May 10th, 2011 - 9:27 pm ICT by IANS  

Washington, May 10 (IANS) Microsoft Corp. Tuesday announced it would buy Skype Global for $8.5 billion in its largest acquisition ever, a media report said.

The deal will give Microsoft a boost in voice and video communications, allowing the company to leverage Skype’s technology on platforms, including Xbox 360, Kinect and Outlook, CNN reported.

It may also help Microsoft’s fledging mobile telephone offering, which lags far behind Apple’s iOS and Google’s Android operating systems. In 2010, Skype users had 207 billion minutes of voice and video conversations, the broadcaster said.

“Skype is a phenomenal service that is loved by millions of people around the world,” Microsoft’s chief executive Steven A. Ballmer said in a statement.

“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,” CNN quoted Ballmer as saying.

Since most of its services are free, Skype makes much of its income from a small group of users who pay for long distance calls to telephone numbers.

In 2010, Skype recorded $859.8 million in revenue but reported a net loss of $7 million, according to a filing.

The Microsoft acquisition is the second time a technology giant has acquired Skype. In 2005, eBay bought Skype for $2.6 billion with hopes of tightly integrating the service as a sales tool. But the deal never lived up to its promise and eBay took a $1.4 billion write-down on its investment, CNN said.

Skype was sold in 2007 to a consortium of investors led by Silver Lake Partners, Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.

The Microsoft deal ends the speculation about the future of Skype. The boards of both companies have approved the deal.

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