Microsoft, Skype, and 8 Billion Dollars

Skype sold to Microsoft for 8 Billion dollars, and Steve Ballmer looks ecstaticAt a whopping price of $8.5 billion, Skype is now officially under new ownership.  Even for a company like Microsoft, that price tag is far from chump change.  Rumors were circulating that Google, Facebook, and Cisco were also interested, but Google only offered a rumored $4.5 billion and others never actually made one.  From what we can tell, the only serious buyer here was Microsoft.  But, was $8+ billion too much to pay for an unprofitable company?

In 2010 Skype grossed $860 million, which is an impressive figure, that is until you note that the EBITDA was only $264 million.  Overall, the company has yet to turn a profit and although they’ve increased revenue Skype still sustained a net loss of $7 million in 2010.  On top of the unprofitability, the company has a withstanding debt of approximately $680 million.

This reminds me a little of the infamous deal that went through in 2006 where Google purchased YouTube for $1.6 billion, despite the fact that YouTube was losing way more money than it was earning.  Will Skype prove to be for Microsoft what YouTube is for Google?  Only time will tell, but this definitely gives Microsoft a shoe-in for the mobile and internet market.

What we can be sure of for now though is complete Skype integration with every possible Microsoft device out there.  Look for Skype coming soon on Windows Phone 7, Windows Live, Microsoft Office, IE10, Lync, Sharepoint, and more.  Specifically, I am looking forward to seeing it on the Xbox.  When you combine Skype with the gesture based possibilities of the Kinect I’m sure there will be some really groovy results; even if Microsoft doesn’t support it I’m sure Kinect modders will be up for the challenge.  Skype also is likely to find integration with the upcoming tablet-friendly Windows 8.



  1. DW96

    May 11, 2011 at 1:54 am

    This is really interesting and I was almost shattered when I heard the news on line TV yesterday…
    I can already imagine Skype becoming a part of Windows Live Essentials, though. I think it’s all they needed to rule the internet completely! :D

  2. shockersh

    May 11, 2011 at 5:59 pm

    Hmm… doesn’t exactly speak very highly of what Microsoft thinks of their own product line – OCS / LYNC or whatever they are calling it these days.

    I’m glad my company decided to pass on LYNC. Looks like they agree it’s crap which is why they bought Skype. ;)

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