Comments on: How being public eases acquisitions

By: thoughtbasket

thoughtbasket — Wed, 11 May 2011 21:57:10 +0000

Having a currency to use in acquisitions is a rationale often used by investment bankers when discussing IPOs with private companies. As you’ve pointed out, it’s not just a sales line.

As for why this deal might make sense for MSFT, check out this blog: http://bit.ly/mluvHm

By: art_arbitrage

art_arbitrage — Wed, 11 May 2011 00:31:00 +0000

http://blogs.wsj.com/deals/2011/05/10/mi crosoft-skype-meet-mr-softies-deal-team/ ?KEYWORDS=microsoft+skype

“Microsoft tends not to use outside banking advisers for its deals, confident enough in its knowledge of the software industry to negotiate its own terms….”

Lol, what acquisition has Microsoft successfully executed on? Hotmail?

Is this anything other than an $8b tax on a failure to innovate or does the “cash repatriation” theory hold water?

By: thispaceforsale

thispaceforsale — Tue, 10 May 2011 20:00:26 +0000

How did Skype suddenly become a hot item? Less than two years ago Ebay couldn’t get rid of it fast enough and there was a void of suitors.
The lesson of Skype is that if something happened two years ago, it might as well have been 200 years ago.

By: Felix Salmon

Felix Salmon — Tue, 10 May 2011 15:06:32 +0000

@Dan_Doust, the point about going public is that stock becomes all but fungible with cash — the difference is much smaller than it is with private companies.

By: Dan_Daoust

Dan_Daoust — Tue, 10 May 2011 14:03:46 +0000

“I’m not entirely clear on why this should be. After all, private-equity companies make enormous acquisitions all the time, and they’re not public.”

Yeah, and they pay with cash, not stock.

By: Tatiag

Tatiag — Tue, 10 May 2011 10:12:37 +0000

Interactive and Visual – Relationship Knowledge Map linking Microsoft to Skype. http://goo.gl/ULHry – By MarketVisual.

By: GRRR

GRRR — Tue, 10 May 2011 08:47:51 +0000

Microsoft’s four possible reasons for purchasing Skype:

1. Microsoft just wanted to spoil Google’s attempt at a purchase, regardless of its merits to Microsoft’s bottom line (if you hadn’t noticed, Microsoft files a complaint every time Google buys someone or does something — Google Books, ITA, Android, Doubleclick, etc.).

2. “WP7 sales are catastrophic” (according to analysts) and therefore needs to buy into features that it can thus add to its mobile OS to make it more enticing. Nokia probably advised them they needed to improve their feature set in order to compete in 2012.

3. Microsoft wanted to acquire any and all of Skype’s IP so that it could sue Google (if no one had gotten into its way, CPTN Holdings would have resulted in Microsoft owning a quarter of Novell’s IP portfolio).

4. Microsoft saw Google Voice’s integration with Sprint and Android, and was concerned that its own platform was about to turn irrelevant if/when GV was tightly integrated with other cellular providers worldwide. (Prices for minutes are about to drop significantly due to wireless VoIP, and GV is at the front line, driving the paradigm shift.)

By: KenG_CA

KenG_CA — Tue, 10 May 2011 06:36:38 +0000

I’m not convinced Google really wanted Skype. They have the same (I think better) service in Google Voice, and while they don’t have the user base, they certainly have the capability to build one, and at a much lower cost than $7 or $8 billion. If there is any truth to the rumor they were bidding for Skype, it was probably to drive up the cost for MS.

There is little reason for FB to need to buy Skype, they already have 500 million or more users who use their site to communicate with each other. Adding VoIP functionality shouldn’t cost them $7B either, but you’re right about needing to be public if you want to grow by acquisition, rather than by profits. And speaking of profits, just how much profits does a company like Skype generate? Is it even one per cent of $7B?

It’s gotta be fun to be able to play with other people’s money.