Morning Coffee May 10 2011

Microsoft Buys Skype for $8.5 Billion

By joseph walker

Microsoft has purchased Internet voice and video communications service Skype for $8.5 billion, the company announced today.

Only two years ago, Andreessen Horowitz bought the beleaguered eBay unit for $2 billion in a move that was criticized by the investment and telecomm communities.

In a lengthy post on AllThingsD, Ben Horowitz of Andreessen Horowitz defends the initial eBay purchase, explains how the business came to thrive and tips his hat to Microsoft on a smart purchase.

Yesterday, when rumors of the deal were initially reported, some analysts suggested to the Times that Microsoft made a move for Skype to help stave off Google from beating out Facebook -- which might not have the cash to pull the deal off -- in the acquisition.

Last week, Google and Facebook were reported to be the two contenders to acquire Skype, at a valuation of up to $4 billion. How the price has doubled in a week is anyone's guess.

EBay bought the company in 2005 for $2.5 billion in 2005 before selling it to Andreessen Horowitz two years later and writing off a $1.4 billion loss on the investment.

It's far from clear that Skype is a valuable property on its own. But for a company like Microsoft that has cash to burn and services like Xbox and search engine Bing to incorporate the service into, it just might work. (WSJ)



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LinkedIn Values Itself At $3 Billion (SF Chronicle)

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Apple and Google Go to Capitol Hill (The Hill)

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