Microsoft Agrees to Buy Skype

eBay's investment in the communication service provider ultimately pays off.

by staff writer
- May 10, 2011

Microsoft announced plans to buy Skype from an investor group for $8.5 billion in cash—nearly three times what eBay paid for the company in 2005.

eBay, which owns 30 percent of Skype, will make about $2.3 billion on the deal, according to news reports.

eBay paid $2.5 billion for Skype in 2005, a move by former eBay CEO Meg Whitman that many criticized. Whitman envisioned the communications service giving buyers and sellers the option to communicate verbally to finalize sales on the auction site. However, this idea never took flight and, in 2009, eBay sold 70 percent of Skype to a group of investors led by Silver Lake Partners for a reported $1.9 billion.

By retaining an equity stake in the company, eBay is now able to profit from its initial investment, to the tune of $1.7 billion.

Skype will be a new division within Microsoft, and Skype CEO Tony Bates will take on the role of president of Microsoft's Skype Division, the company notes.

The acquisition will allow it to provide more benefits to customers and add new "business and revenue opportunities," Microsoft notes, adding that Skype will support devices like Xbox, Kinect, its Windows Phone and other Windows devices.

"Skype is a phenomenal service that is loved by millions of people around the world," says Microsoft CEO Steve Ballmer. "Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world."

While the deal is expected to close some time this year, it is subject to regulatory approvals and other closing conditions, Microsoft notes.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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