Microsoft Acquires Skype For $8.5 Billion Cash

May 13th, 2011 at 11:49 am

It seems that there is no stopping tech giants from even becoming bigger. With Google venturing into other tech businesses to add into its portfolio aside from its profitable online search and ads division, software giant Microsoft may be following the same path. It may also be trying to get into other tech businesses in order to bulk up its revenues and earning capacity in the future. This includes buying other established companies like Skype.

What started out as an industry rumor recently turned out to be true. Microsoft announced just recently that it is buying popular Internet communications provider Skype for a cool US$8.5 billion. Both companies have come into a definitive agreement where Microsoft will acquire Skype in exchange for some $8.5 billion in cash. This will also lead to Microsoft creating a new business division for this acquisition instead of absorbing Skype into any of Microsoft’s current lines of business. The new division, which will be called Microsoft Skype Division, will be headed by Skype CEO Tony Bates.

Microsoft reported that it plans to integrate Skype into its other software as well as hardware products in the future which may include Xbox and Windows Phone to include Skype support as well as providing a connection between Skype with Outlook, Lync and Xbox Live. These plans have yet to be established as Microsoft haven’t provided a timetable on when to make this integration available for consumers.

Microsoft’s acquisition of Skype is the software giant’s biggest acquisition to date, cash-wise. It does provide a promise of offering another profitable revenue stream for Microsoft, but it will depend on how they try to make something out of the new partnership. Not all of Microsoft’s spectacular acquisitions in the past have actually worked out. In fact, Microsoft’s track record when it comes to acquisitions and mergers aren’t exactly that rosy to say the least. The software giant may need to work out something and work hard at it in order to make this recent costly acquisition and investment carve out some returns for the company.


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