Microsoft (NSDQ: MSFT), which has been quiet on the deal front for several years now, is reportedly set to change that in a big way, picking up Skype for $7 billion-plus. The Wall Street Journal (NSDQ: NWS) cites sources who say a deal could be announced as early as Tuesday; the paper put the price as high as $8.5 billion. Later, Kara Swisher reported confirmation that the deal was done and an early am announcement is set. We first reported on the Microsoft/Skype tie-up yesterday morning.
It would be the largest acquisition in Microsoft’s history, topping the company’s $6.3 billion purchase of aQuantive in mid-2007, which has arguably not paid off.
The Journal lists a number of general reasons why Microsoft is interested in the VOIP service: It would give the company a major consumer-facing internet brand, it could boost Microsoft’s own enterprise-focused Lync communications platform, and it could possibly somehow be integrated with its Windows Phone 7 operating system. Skype had $860 million in sales in 2010 and posted a net loss of $7 million. Most important, perhaps, Skype has more than 660 million registered users — although active users is smaller number: around 124 million.
Skype has repeatedly changed hands in recent years. EBay, which purchased the company for $2.6 billion in 2005, sold it back in 2009 to the company’s founders, as well as VC firms Silver Lake Partners and Andreessen Horowitz in a deal that valued the company at $1.9 billion. (An aside: EBay still holds a 30 percent
35 percent stake in the company, so if Microsoft really is paying $7 billion or more for Skype, the e-commerce company should just about make all of its money back).
Last summer, Skype filed to go public, although in recent weeks there were reports that the company was considering selling itself to Facebook or Google (NSDQ: GOOG) instead. Microsoft was considered to be a long-shot suitor with GigaOm first reporting Sunday that Microsoft was in fact in the mix too.
For the record, we have contacted spokespeople for both Skype and Microsoft and for the moment neither are commenting on the reports.