Microsoft is nearing a deal to buy the popular Internet Telephone service Skype in what could be the biggest deal in the software market’s 36 year history, according to a published report.
Just days after reports that google and facebook were interested in partnering with,and possible buying VoIP company Skype, comes a claim from the Wall street Journal that Microsoft is planning to buy the company for $7 Billion, in a deal worth closer to $8 billion after Skype’s debts are considered. This mirrors an earlier rumor of a Microsoft-Skype deal published by GigaOm. An announcement could be made as early as Tuesday.
Last year, Skype had revenue of $860 million on which it posted an operating profit of $264 million. However, it overall made a small loss of $7 million and had long term debt of $686 million. A $7 billion purchased price would represent a huge premium over the $3-4 billion conjectured in the Facebook and Google deals.
Microsoft has in the last couple of years shied away from similar large acquisitions, sticking to buying smaller, easier to manage organizations, leading some to argue that this was a direct result of the digestive difficulties faced with the large purchases. A $7 billion Skype acquisition would show that perhaps Redmond believes it has resolved such problems.
Most people use Skype’s free calling services a penchant that has made it difficult for the service to make money since entrepreneurs Niklas Zennstrom and Janus Friis started the Luxembourg company in 2003.
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