Tuesday, May 10, 2011

Microsoft to acquire Skype

Microsoft Corp. agreed to buy Internet phone company Skype Technologies SA for $8.5 billion in cash — the most aggressive move yet by Microsoft to play in the increasingly converged worlds of communication, information and entertainment. The deal will let Microsoft "be more ambitious, do more things," Chief Executive Steve Ballmer said in an interview.

Skype will become a new business division within Microsoft, and Skype Chief Executive Mr. Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Mr. Ballmer.

The Skype deal ranks as the biggest acquisition in the 36-year history of Microsoft, a company that traditionally has shied away from large deals. In 2007, Microsoft paid approximately $6 billion to acquire online advertising firm aQuantive Inc. Many current and former Microsoft executives believe Microsoft significantly overpaid for that deal. But they are also relieved that Microsoft gave up on an unsolicited $48 billion offer for Yahoo Inc. nearly three years ago. Yahoo is valued at half that sum today. 

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