Microsoft to acquire Skype for $8.5 billion
Author Henry
NEW YORK — Microsoft has finally agreed to buy Internet phone service provider Skype for $8.5 billion in cash, the companies announced Tuesday.
The deal gives Microsoft access to the market for real-time video and voice communications. The software maker said it plans to use Skype to support such products as the Xbox gaming system and Windows Phone.
As the largest acquisition in its history, the deal marks a significant change in strategy for Microsoft, which has not bought another company since 2006.
“Skype is a phenomenal service that is loved by millions of people around the world,” said Microsoft chief executive Steve Ballmer.
In 2010, Skype had 170 million connected users who logged over 207 billion minutes of voice and video conversations. The company reported a $6.9 million net loss last year, on nearly $860 million in revenue. It reported $686 million in long-term debt, and slightly more than $1 billion in liabilities.
Under the terms of the deal, Microsoft will assume Skype’s debt.
Skype will become a new business unit within Microsoft, to be run by current Skype CEO Tony Bates, who will report directly to Ballmer.
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