|Cisco CEO John Chambers says that the embattled networking giant has a lot of work ahead of it.|
Microsoft (MSFT - Get Report) kicked off the week with a major piece of M&A, spending $8.5 billion to acquire Skype, squaring up to Cisco's WebEx and Apple's (AAPL - Get Report) FaceTime products. The all-cash deal injects a much-needed adrenalin shot into the software giant's mobile strategy. Combined with Microsoft's Nokia (NOK - Get Report) alliance, the Skype deal could be a shrewd move, increasing the pressure on the fledgling FaceTime technology and Google's (GOOG - Get Report) Google Voice. "Everything has been shifting away from Microsoft," said one analyst earlier this week, referring to the company's failure expand beyond its dominance of the PC era. "They need to make acquisitions, since nothing else has worked." Skype is the leading international Internet calling service with 663 million registered users, 170 connected users and 8.8 million paying customers. Microsoft, however, was not the only tech giant interested in Skype. As eBay (EBAY) explored its options to carve out Skype last year, Verizon (VZ) was one of the players that sniffed around, according to people familiar with the Skype spinoff. Microsoft shares closed the week down 1.15% at $25.03 on Friday.