Microsoft to buy Skype for $8.5 billion

Microsoft is planning to buy Internet phone service Skype for $8.5 billion in cash, a rich price as it seeks to regain ground on growing rivals such as Google. Microsoft's interest in the money-losing but popular service highlights a need to gain new customers for its Windows and Office software. Skype has 145 million users on average each month and has gained favour among small business users. Investors expressed scepticism over the deal, sending Microsoft shares down slightly. "It doesn't make sense at all as a financial investment," said Andrew Bartels, an analyst at Forrester Research. "There's no way Microsoft is going to generate enough revenue and profit from Skype to compensate." The sale marks a big payday for Skype's owners, online auction site eBay and a group of investors including Silver Lake, the Canada Pension Plan Investment Board and Andreessen Horowitz. Skype delayed plans for an initial public offering that was expected to value the company at more than $3 billion. It had been looking at other options, including tie-ups with Facebook and Google. Such a deal was expected to value Skype at $3 billion to $4 billion.

Category:

News & Politics

Tags:

• FACT