Microsoft's $8.5 billion Skype deal updated with analyst comment
NEW YORK, (TheStreet) -- After years of missing the boat in mobile and online, Microsoft, through Skype, has made a big splash as one of the key drivers of mobile and Internet communications services.
Microsoft's (MSFT) $8.5 billion all-cash deal for Skype will put the software giant squarely in one of the leading positions as a Net communications operator. And suddenly with Skype, Microsoft will go up against other tech giants like Cisco's (CSCO) WebX, Apple's (AAPL) FaceTime, not to mention the ire it may stir with telco partners like AT&T (T) and Verizon (VZ), who now have a more imposing voice and video competitor.
|Microsoft CEO Steven Ballmer|
Skype is the leading international Internet calling service with 663 million registered users, 170 connected users and 8.8 million paying customers.For Microsoft, the addition of Skype would not only make it one of the leading players in teleconferencing for businesses, it promises to go against Google's (GOOG) own video calling service in Gmail. But more importantly, Microsoft's addition of Skype will unfold in a very large way in mobile once it is built into the new Nokia Windows 7 phones next year. Assuming we will all be video chatting on our phones sometime in the near future, Microsoft's alliance with Nokia (NOK) and Skype gives it an enviable position ahead of Apple's fledgling FaceTime service and Google's Google Voice offering. "Everything has been shifting away from Microsoft," says one analyst referring to the company's failure expand beyond its dominance of the PC era. "They need to make acquisitions, since nothing else has worked," says the analyst. Last month, Skype filed for a public stock offering, but a shake-up of top management caused the company to postpone its IPO. Outfits like Facebook and Google had kicked the tires recently, and last year even Cisco gave it a look. Microsoft was obviously the most motivated player to get a piece of the Net calling action. Microsoft shares were down 2% to $25.39 in early trading Tuesday as investors balk at the cost of the Skype move. --Written by Scott Moritz in New York.
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