Microsoft and Skype Merger

MICROSOFT AND SKYPE MERGER

The merger that I chose to write this paper on is Skype merging with Microsoft Corporation. Microsoft purchased Skype for 8.6 billion dollars. This merger is in the final stages of completion, the deal has to be approved by regulators. I found this merger to be rather interesting on many different levels. The company has shown no signs of being in trouble financially. Skype has purchased a competitor, developed applications for iPhone and Android users, and are creating hundreds of new jobs. Skype is a private company and were going to make an Initial Public Offering announcement; instead they announced that Microsoft. will be purchasing the company. I feel that Microsoft's stock will increase with this merger, due to the popularity of Skype; even though Microsoft's stock has been declining since the announcement of the merger. The stock could also be declining due to David Einhorn, who owns a company called Greenlight Capital, stated that Microsoft needs a new CEO because the company is stuck in the past.

I believe that this merger is great for both companies. Skype is a very popular internet based phone company, helping families connect all over the world. Microsoft has very strong technology to tie the Skype idea too. For example, a major item that Microsoft. manufactures is the XBOX 360. Once engineers can figure out how to make Skype work on the XBOX 360 sales will increase. I know from personal experience, if I have to spend an extra 100 dollars on an item, which will allow me to see my family when I am away, I will spend it. I also feel that Skype might become a Microsoft program; meaning that you would only be able to use Skype with Microsoft hardware. Microsoft has developed a few cell phones, and their popularity is very minimal. If they monopolize the use of Skype on their cellular phones, I feel would create enormous revenue streams for the company and cell phone purchases will sky rocket. The CEO of Skype is quoted in this article saying "Everything's a balance in life. It was a great offer. But from my perspective, that was secondary to the broader mission, which is becoming a global communications services provider that can hit a billion people. This just helped us accelerate that." (Bates 2011) Skype, before the merger, had 170 million users; by striving towards the 1 billion users I feel this company will be very strong and for a very long time.