Will Skype deal turn around Microsoft fortunes?
By siliconindia   |   Tuesday, 10 May 2011, 19:34 IST
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Will Skype deal turn around Microsoft fortunes?
Bangalore: Last week, a rumor aroused that Facebook and Google were trying to bag Skype through a very potential deal, but it is Microsoft who is close to buying the leading Internet Phone Company. The deal is valued to be approximately $7 billion to $8 billion. If the deal clicks then it would be ranked as the biggest acquisition in the 36-year history of Microsoft. Lately, investors of Microsoft have not been very confident of its growth as it is facing a very stiff competition from its rivals Google and Apple. Microsoft has made vast bulk profits from its Windows and Office software systems, but was not able to make a mark with its search engine, 'Bing' or Windows Phone 7 OS. It is struggling to get more traction in the consumer market for other products than its lucrative Office suite softwares. Skype could play a major role in Microsoft's effort to turn around its fortunes in the mobile-phone market, an area where it has lagged badly behind Apple and Google. Skype is a leader in Internet telephony business with over 663 million users around the world. During 2010, Skype users logged 207 billion minutes of voice and voice video calls. Industry watchers feel that Skype will be able to propel Microsoft's arena in the mobile phone market. Along with its hugely lucrative Office suite of applications, Microsoft has introduced 'Lync', which is a corporate messaging tool which combines together email, instant messaging and voice communications into a single application. If Microsoft can successfully integrate Skype, it would give Microsoft users more incentive to stick with its products and, with Nokia accepting Windows 7 as the standard software platform for its smartphones, things can really getting going for Microsoft. But some analysts wonder if the deal is actually over rated as Skype has produced little net profit in past eight years since it was founded. Last August, Skype filed documents to go public but put its IPO plans on hold after bringing in a new chief executive, Tony Bates. In 2007, Microsoft paid approximately $6 billion to acquire online advertising firm aQuantive for which Microsoft was criticized by former Microsoft executives as they thought that the company over paid. But they also relieved that Microsoft gave up on an unsolicited $48 billion offer for Yahoo nearly three years ago which proved to be a good move as Yahoo is valued at half that sum today. The internet giants are tight lipped about the deal and have not yet confirmed the news. People familiar with the matter cautioned that negotiations are not yet final and the deal could still fall apart anytime

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