2nd LD Writethru: Microsoft to buy Skype for 8.5 billion dollars

2nd LD Writethru: Microsoft to buy Skype for 8.5 billion dollars

SAN FRANCISCO, May 10 (Xinhua) -- Microsoft Corp. on Monday saidit will buy Internet communications company Skype for 8.5 billionU.S. dollars in cash, a bold move for the software giant to explorenew business opportunities.

"Skype is a phenomenal service that is loved by millions ofpeople around the world," Microsoft CEO Steve Ballmer said in astatement.

"Together we will create the future of real-time communicationsso people can easily stay connected to family, friends, clients andcolleagues anywhere in the world," he added.

Microsoft said it has agreed to buy Skype from the investor groupled by Silver Lake, and the deal has been approved by the boards ofdirectors of both companies.

Skype will become a new business division within Microsoft, andSkype CEO Tony Bates will assume the title of president of theMicrosoft Skype Division, reporting directly to Ballmer.

The Skype deal ranks one of the biggest purchase in the 36-yearhistory of Microsoft, which is struggling to compete in the fieldsof Internet and mobile phones beyond its dominance on personalcomputer software market.

Founded in 2003 and based in Luxembourg, Skype offers a softwareapplication that allows users to make free or cheap phone calls andchats over the Internet with additional features including instantmessaging and video conferencing.

Numbers showed that Skype's 170 million connected users made over207 billion minutes of voice and video conversations in 2010.

Skype was acquired by eBay in September 2005, and then acquiredby an investment group led by Silver Lake in November 2009.

In a press release announcing the acquisition, Microsoft notedthat the deal will increase the accessibility of real-time video andvoice communications, generating significant new business andrevenue opportunities, and enhancing its existing offerings of real-time communications products and services.

Microsoft said Skype will support its devices like Xbox andKinect, Windows Phone and a wide array of Windows devices, and itwill continue to invest in and support Skype clients on non-Microsoft platforms.

The acquisition is expected to obtain all required regulatoryclearances within this calendar year, Microsoft said.