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Microsoft + Skype + Nokia?Microsoft + Skype + Nokia?

7:00 AM If Microsoft splashes $8B on Skype, how will that affect Nokia?

Michelle Donegan

May 10, 2011

1 Min Read
Microsoft + Skype + Nokia?

7:00 AM -- Fresh from its partnership with mobile phone giant Nokia Corp. (NYSE: NOK), Microsoft Corp. (Nasdaq: MSFT) is set to splash up to US$8 billion on buying Skype Ltd. , according to the Wall Street Journal. (See Nokia, Microsoft Team Up, RIP Symbian & MeeGo: Nokia Ties Future to WP7 and MWC 2011: Microsoft & Nokia Court Carriers .)

Skype had been planning an initial public offering for earlier this year, but rumors have circulated recently about potential buyers for the VoIP service provider. That Microsoft is in the mix was first reported by GigaOm. (See Skype: In Numbers.)

If the deal happens, it will be the third time Skype has been acquired: eBay Inc. (Nasdaq: EBAY) bought the VoIP company for $2.6 billion in 2005 and then sold a majority stake in the company in November 2009 for about $1,9 billion. (See eBay Completes Skype Sale, EBay Buys Skype for $2.6B, Former eBay CEO Defends Skype Buy, Skype Goes on the Block and eBay Still Likes Skype.)

So how is Skype worth $8 billion to Microsoft now? The price sounds insanely high. That's more than nine times 2010 revenue, which was $860 million. Didn't eBay pay too much for Skype six years ago? (See Skype Targets $1B Revenues, CES 2011: Skype Steals International Scene and Skype's the Limit.)

The bigger question, though, is what Microsoft might do with Skype. Could the VoIP application become part of its mobile platform and find itself embedded in Nokia's smartphones?

Don't rule anything out...

— Michelle Donegan, European Editor, Light Reading Mobile

About the Author(s)

Michelle Donegan

Michelle Donegan is an independent technology writer who has covered the communications industry for the last 20 years on both sides of the Pond. Her career began in Chicago in 1993 when Telephony magazine launched an international title, aptly named Global Telephony. Since then, she has upped sticks (as they say) to the UK and has written for various publications including Communications Week International, Total Telecom and, most recently, Light Reading.  

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