Microsoft Buys Nothing (Skype) for 8.5 Billion

May 10, 2011
J. Webster
Comments Off on Microsoft Buys Nothing (Skype) for 8.5 Billion

The news from around the web is that Microsoft made another blunder in their efforts to catch up with Google, Facebook and Apple with the purchase of Skype. And most of the blame is falling on Steve Ballmer – one Yahoo Finance message boarder calling him the ’emBallmer’, perhaps as in putting the once powerful Microsoft into the grave with his repeated mistakes as CEO. The purchase of Skype, at 8.5 billion, yes billion, is the biggest purchase Microsoft has made in their history.

“thanks emBallmer! i will start using google talk now!
i’ve been using skype for 4 years and never paid a dime. nor shall i ever pay anything. that is the vast majority user base of skype and why they could not do an IPO. it took a moron like yourself to do a deal like this.

you just bought NOTHING for 8.5B”

Skype was bought and sold before, for a quarter of the price Microsoft is paying now. It has never made a profit. From the Guardian:

Skype has never made a profit: in 2010 it recorded a loss of $7m on revenues of $860m – $1.30 per registered user a year, or $5 per “connected” user a year. While revenues have been growing it has been able to negotiate better call termination rates around the world with telephone companies.

The acquisition is the second in Skype’s eight-year history. In October 2005 it was bought by eBay for $2.5bn, but was 70% sold in October 2009 to a consortium of private equity and venture capitalists.

Who’s the winner in all of this? Well those venture capitalist who backed Skype of course.

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