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Microsoft Buys Skype for $8.5 Billion

Mario Tama, Getty Images

Microsoft is set to shell out big bucks – a whopping $8.5 billion – to buy Skype Global, the NY Times is reporting.

According to the report, the deal will allow Microsoft to leverage Skype, which last year had 207 billion minutes of voice and video conversations, on platforms including Xbox 360, Kinect and Outlook.

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

Will the $8.5 billion move pay off? It’s hard to say. As the article points out, Microsoft’s past purchases were occasionally hit-or-miss. Skype has also proved to be a difficult sell, as was the case in 2005, when eBay purchased the tool for $2.6 billion, only to take $1.4 billion write-down.

Time will tell. In the meantime, while $8.5 billion may seem like a lot of money, it isn’t actually the biggest sell of all time. Just ask Vodafone Airtouch, which in 2000 acquired Mannesmann for an enormous $208.2 billion. A year later, AOL infamously merged with Time Warner for $181.6 billion, which Time Warner CEO Jeff Bewkes later referred to as “the biggest mistake in corporate history.”

[NY Times]

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