The computing giant just got bigger. Microsoft bought Skype, the video messaging platform, for $8.5 billion. Below is the report from Wall Street Journal.
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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.
The Redmond, Wash., company was motivated to acquire Skype because communication technologies have been “the backbone” of Microsoft’s growth in recent years and that Skype has “built a real business” in the communications field, said Mr. Ballmer.
In a joint phone interview with Skype Chief Executive Tony Bates, Mr. Ballmer said Microsoft sees an opportunity to expand Skype’s reach by blending it with technologies across Microsoft’s vast portfolio of products, including the Xbox videogame console, Windows Phone software and Lync communications product for businesses.
When asked about the high value of the acquisition Mr. Ballmer said the deal will be accretive to Microsoft profits in “year one” after the transaction closes.
“We’re buying a company with Ebitda over $250 million,” he said. “We see an opportunity to accelerate its revenue and profit base.”
Skype will become a new business division within Microsoft, and Mr. Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Mr. Ballmer.
Buying Skype—a service that connects millions of users around the world via Internet-based telephony and video production Chicago—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. The need to add a communications component is seen as crucial with the growing popularity of Apple Inc.’s FaceTime video-chat service and Google Inc.’s Voice.
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