Microsoft Corp. agreed to buy Internet phone company Skype Technologies SA for USD 8.5 billion in cash- the most aggressive move yet by Microsoft to play in the increasingly-converged worlds of communication, information and entertainment, WSJ informs. Buying Skype—a service that connects millions of users around the world via Internet-based telephony and video—would give Microsoft a recognized brand name on the Internet at a time when it is struggling to get more traction in the consumer market. “Skype is a phenomenal service that is loved by millions of people around the world,” Microsoft Chief Executive Steve Ballmer said.
“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.” Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype division, reporting directly to Ballmer. The companies didn’t close disclose what portion of the deal includes debt, but The Wall Street Journal reported the equity portion of the deal would likely be worth USD 7 billion to USD 8 billion. Microsoft shares slipped 0.9 pc to USD 25.59 in premarket trading and are down 6.1 pc in the past three months. The deal shows how far Skype has come since it was launched in 2003 by Niklas Zennstrom and Janus Friis, two men who had created a file-sharing technology called Kazaa that became widely associated with music piracy.