4 ms·
Why's it silly? He's buying a commodity business (thats what VOIP is) for 32x earnings. There's a reason M&A is often referred to as a winner's curse -- becaus
by jakarta 15y ago
Why's it silly? He's buying a commodity business (thats what VOIP is) for 32x earnings.
There's a reason M&A is often referred to as a winner's curse -- because winning the bidding typically means overpaying. The synergies execs often talk about almost -always- fail to be realized.
Shareholders of Microsoft would have been much better off if the company just bought back $8.5bn in stock. A dividend would have been out of the question due to tax repatriation issues.
- alecco 15y agoNot only a commodity business, a declining one. A specialized desktop application to chat. Hello, it's 2011, people do web-based peer-to-peer video chat for free. Just, ask the Chatroulette users. Free. I bet this will go down as one of the most stupid buyouts in history. http://en.wikipedia.org/wiki/Real_Time_Media_Flow_Protocol http://en.wikipedia.org/wiki/Real_Time_Media_Flow_Protocol
- reedlaw 15y agoSkype is free for video chat too. And I must say it's worth every penny for its phone line in service when compared to free offerings like Google Voice.
- ericd 15y agoHaving Windows users be able to call each other and every other Skype user right out of the box could be pretty interesting.
- sunir 15y agoSkype already has enough market share that bundling with Windows is not likely to generate enough growth to justify the purchase alone.
- qq66 15y agoWindows has ~4 times as many users as Skype.
- brown9-2 15y agoYou mean instead of those out-of-the-box Windows users having to just go to www.skype.com? It's pretty easy to install.
- evgen 15y agoThere is a significant difference between bringing in a new product and having that product be a part of the standard install on every laptop/desktop from the perspective of Enterprise IT.
- Sandman 15y agoYes, but wouldn't that get them in trouble because of the anti-monopoly laws? If I remember correctly, they got sued just for bundling IE with Windows, right?
- adsr 15y agoWindows users could do this already without Microsoft owning Skype. Users who aren't able to install Skype on their own, probably won't use it anyway.
- nandemo 15y agoDo you have a source for "32x earnings"? I suspect it's even worse than that. In other HN thread someone mentioned the price was about 300x earnings, and via google I could find this: Skype's revenues for the first six months of 2010 were $406 million, with a net income of only $13 million.
- adw 15y ago32x EBITDA (the net income is artifically low thanks to one-off writedowns).