Investors knock Microsoft's Skype deal

Posted By: Religare
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{image-16-dollar-us}Investors are raising question behind the logic of deal between Microsoft Corporation and Internet phone service provider Skype for $8.5 billion. The investors and critics also said that the software giant is paying too much for the deal.

The price quoted is more than the double the expected value of Skype if it had gone ahead with its planned initial public offering, leaving investors concerned that how the deal would be profitable for Microsoft.

Skype had reported a loss of $7 million during the previous year on revenue of $860 million, despite a growth in its user base by around 40% to 145 million.

Microsoft Chief Executive Steve Ballmer informed that the deal would contribute to the the company's profits from the first year, taking into consideration the $264 million Skype made last year, excluding interest, tax, depreciation and amortization.

He also said that the Skype, will be a separate entity within Microsoft, and will assist in improving the sales of its other products such as Xbox game console and Kinect motion-sensing system, and add luster to its Office suite of applications.

Read more about: microsoft, skype, dollar
Story first published: Monday, May 16, 2011, 9:30 [IST]
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