When the Wall Street Journal reported last night that Microsoft was going to buy Skype, the response was puzzlement. Though Skype has some value, the estimated $7 billion-8 billion valuation was unfathomable. Microsoft has now confirmed the purchase and held a press conference to announce the takeover. The morning after the night before, is it making any more sense?
From what little the company has said, not really. Microsoft will buy Skype for $8.5 billion in cash. The companies have entered into a definitive agreement, and the deal has received approval from both boards of directors; pending regulatory approval, it will close by the end of the year. Skype will be run as a new business division within Microsoft, with Skype CEO Tony Bates taking a new role as president of the Microsoft Skype Division, reporting directly to Microsoft CEO Steve Ballmer. Speaking at the press conference, Ballmer said that Microsoft originally planned a partnership before deciding to buy the company outright.