Why buy Skype?

“Irrepressible” is a word that is usually used to denote something that is hard to control or restrain. Steve Ballmer, the boss of Microsoft, is obviously very fond of it. At a press conference on May 10th to announce the company’s whopping $8.5 billion purchase of Skype, an online phone and video-calling service, he used the word several times to imply that Microsoft was still a dynamic company. But the firm’s shareholders may end up wishing that Mr Ballmer had shown considerably more restraint when negotiating the firm’s largest ever takeover.The way the deal came about shows how desperate the software giant was to get its hands on Skype. The target company was heading for a stockmarket flotation until Microsoft suddenly lobbed in an unsolicited offer for it. The amount Microsoft ultimately coughed up for Skype was generous enough to convince the firm’s investors, which include Silver Lake Partners, a private-equity fund, and Andreessen Horowitz, a venture-capital firm, to jettison the planned public offering in favour of Microsoft’s all-cash deal.
http://www.economist.com/blogs/schumpeter/2011/05/microsoft_and_skype

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