Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
The company was founded in 2003, with its headquarters in Luxembourg. It is available for free download. Microsoft was founded in 1975 and has since become the world leader in software, services, and solutions for businesses and individual people. It is expected that the acquisition would help both companies to expand their services for the benefit of customers, while also benefiting themselves by expanding their reach across the world.
The potential success of the acquisition depends on a number of uncertainties. The change to cloud-based computing, for example, could result in increased competition. Microsoft's business model may need to change. The company may also face challenges when protecting its property rights or when others claim that Microsoft has violated their property rights. Microsoft could also have security vulnerabilities that could result in a reduction of its revenue.
Skype's revenue for 2010 was $860 million, with a loss of $7 million. Its long-term debt was $686 million. This debt is included with the $8.5 billion that Microsoft would pay for Skype. This...
If one assumes a 30% increase in adjusted EBITDA from 2010 to 2011, the projection is 25.0x for 2011. This number is based upon Skype's user base, which grew by 40% from 2009 to 2010, with its revenue that increased by 20%, and adjusted EBITDA by 40%.
Although some critics believe that Microsoft's investment in Skype is too high, both companies believe that the deal will create more benefits than losses for both companies and their users in the long-term.
References
Aggarwal, S. (2011, May 10). Skype Acquisition, Many Synergies for Microsoft. Retrieved from: http://blogs.vccircle.com/500/healthy-airhotel-travel-trends-to-benefit-makemytrip/
Daily News and Analysis (2011). Microsoft to Acquire Skype for $8.5 billion. Retrieved from: http://www.dnaindia.com/money/report_microsoft-to-acquire-skype-for-8-5-billion_1541491
Microsoft News Center. (2011, May 10). Microsoft to Acquire Skype. Retrieved from: http://www.microsoft.com/Presspass/press/2011/may11/05-10CorpNewsPR.mspx
Microsoft purchased Skype for $8.5 billion (Primack, 2010). This marked the third time in five years that Skype had been sold, first to eBay and then to a private investment group. The company filed for an IPO, but that never came to pass as Microsoft entered the bidding and took over. There have been significant questions from industry observers about the value of Skype to Microsoft, and whether Microsoft
Skype is not a new technology. VoIP has been around for years but Skype took years to reach the kind of status it enjoys today. Owing to its pioneering status, Skype became popular rather fast which can be held responsible for its slow growth in later years. While Skype was everything that VoIP was touted to be, it still lacked the kind of culture and corporate strategy needed to turn
Skype MSFT In 2010, Microsoft purchased Skype for $8.5 billion, and at the time many observers were unsure of what value Skype had for the software giant (Bright, 2011). According to some, Skype's core VoIP business is subject to commoditization (Ricknas, 2008). Another issue that Microsoft must address is Skype's business model. Prior to the purchase, Skype had filed for an IPO and the filing documents reveal some major financial issues
Skype competes as a differentiated player in the VoIP industry. The company's business model is based on free distribution of its software, and then encouraging users to sign up for a payment plan that covers usage. The company's technology was once innovative but has now been commoditized (Blodget, 2011). The company was recently purchased by Microsoft for $8.5 billion (Saporito, 2011). The value of the company derives not from the
Not only is there a substantial monthly provider savings but there is also a reduction in the need for an it person to work on the phone systems. While their web site says not it tech needed, (Skype) there is always some tweaking to be done and a moderate yearly ongoing cost has been built in as well as initial assistance with the setup in the first year of
Microsoft's Search Analysis & Evaluation General Environment The advanced show of the U.S. economy in the late 1990's has led a lot of experts to conjecture that a New Economy has materialized in which heavy investment in information technology (IT) has led to an period of continued economic growth. Even though the current economic slowdown has dampened some of the passion for the idea of a New Economy, a basic question remains of