It could be the most expensive call Microsoft Corp. has ever made.
In acquiring Internet phone service Skype for $8.5 billion, the technology giant is seeking new ways to make money as its core computer software business faces a growing threat from a new generation of powerful mobile devices.
But some analysts believe the Skype deal, Microsoft's largest ever, could become a multibillion-dollar dud, as it once was for EBay Inc. The online auction site acquired Skype for $3.1 billion in 2005 but then sold most of its stake in the phone service after failing to wring a profit from it.
"The question is, what's the point here?" said James E. Schrager, a professor of entrepreneurship at the University of Chicago Booth School of Business. "They seem to be buying an interesting company to which Microsoft doesn't really add anything."
In explaining the purchase, Microsoft said it would weave Skype's Internet and video calling services into its Windows smartphone, Xbox gaming console, and Office e-mail and document software, allowing users to more easily call their friends and colleagues. Microsoft said it hopes to extract more revenue from Skype by showing users colorful advertising as they make calls.
Wall Street investors were not convinced, however, and Microsoft's stock lost about 1% in regular trading, falling to $25.67. The stock is down 8% so far this year, while the technology market overall is sharply higher.
Read More
http://www.latimes.com/business/la-fi-microsoft-skype-20110511,0,5652246.story
In acquiring Internet phone service Skype for $8.5 billion, the technology giant is seeking new ways to make money as its core computer software business faces a growing threat from a new generation of powerful mobile devices.
But some analysts believe the Skype deal, Microsoft's largest ever, could become a multibillion-dollar dud, as it once was for EBay Inc. The online auction site acquired Skype for $3.1 billion in 2005 but then sold most of its stake in the phone service after failing to wring a profit from it.
"The question is, what's the point here?" said James E. Schrager, a professor of entrepreneurship at the University of Chicago Booth School of Business. "They seem to be buying an interesting company to which Microsoft doesn't really add anything."
In explaining the purchase, Microsoft said it would weave Skype's Internet and video calling services into its Windows smartphone, Xbox gaming console, and Office e-mail and document software, allowing users to more easily call their friends and colleagues. Microsoft said it hopes to extract more revenue from Skype by showing users colorful advertising as they make calls.
Wall Street investors were not convinced, however, and Microsoft's stock lost about 1% in regular trading, falling to $25.67. The stock is down 8% so far this year, while the technology market overall is sharply higher.
Read More
http://www.latimes.com/business/la-fi-microsoft-skype-20110511,0,5652246.story
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