Microsoft to acquire Skype in $8.5bn deal (by Craig Nicholson)

Microsoft is staking its place in the VoIP for business market with the acquisition of the world's biggest web calls provider.

The company announced today (May 10th) that it has agreed to buy Luxembourg-based Skype for $8.5 billion (£5.2 billion) in cash from investor group Silver Lake. It has been approved by the boards of both firms.

Microsoft said the acquisition will increase the accessibility of real-time video and voice communications, and bring benefits to customers who use VoIP for business. Skype will support Microsoft devices including the Xbox and Kinect, Windows Phone and a range of Windows devices. Meanwhile, Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other online communities.

"Skype is a phenomenal service that is loved by millions of people around the world," said Microsoft chief executive officer 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."

Founded in 2003, Skype was acquired by eBay before it was bought out by Silver Lake in November 2009. In the last 18 months, the service has increased monthly calling minutes by 150 per cent.

The move has been met with mixed comments from analysts, some of whom have suggested the price is too high. Michael Clendenin, managing director of consulting firm RedTech Advisors, explained to Reuters that acquiring an internet business for ten times sales could seem "downright cheap". He added: "But if you consider [it] was just valued at about $2.5 billion [£1.5 billion] 18 months ago when a chunk was sold off, then $8.5 billion seems generous and means Microsoft has a high wall to climb to prove to investors that Skype is a necessary linchpin for the company's online and mobile strategy."

However, BGC Financial analyst Colin Gillis told the news agency that the move will give Microsoft an advantage in the tablet market if it is able to put Skype on Windows 8.

Kunal Bajaj, head of telecommunications consulting firm Analysys Mason India, explained to Bloomberg that it "remains to be seen" whether the Skype deal will act as a "silver bullet" for Microsoft.

Source: http://www.microsoft.com/Presspass/press/2011/may11/05-10CorpNewsPR.mspx