Microsoft to buy Skype for $7 billion

Post by gwern » Tue, May 10, 2011, 5:32 PM UTC

hessenwolf wrote: post #227

dspillett wrote: post #223

Earlier quoted context omitted.

1. Since eBay sold its controlling stake (they still own an amount of equity in the business) the investors now in control have got the rights to the whole thing where eBay didn't actually buy the rights to some of the code off the founders - this makes quite a difference. 2. The western world is slowly pulling itself out of a recession right now, rather than two years ago when we were on the other side and already s…

Hold on - did Ebay just score a win with this?

Post by Lazlo_Nibble » Tue, May 10, 2011, 7:41 PM UTC

blub wrote: post #184

brianpan wrote: post #162

Earlier quoted context omitted.

This is getting way off topic, but of course companies have ethics. Just like they have core values, goals, and ambitions... A company is made up of people and those people can choose to make ethical decisions and can have a history of acting ethically or not.

The fact that employees have ethics does have an effect on the actions that the company takes, but that doesn't mean that the company itself "has ethics". At most we can say that a company employs ethical individuals - still - that won't necessarily lead to ethical decisions. Things like peer-pressure, the board of directors, profits, strategy, market pressure and so on can make good people do bad things. Historicall…

Post by hessenwolf » Tue, May 10, 2011, 8:08 PM UTC

smackfu wrote: post #254

hessenwolf wrote: post #225

Earlier quoted context omitted.

Hmmm... I would definitely be happy to pay somebody a few bucks to perform a reasonable independent valuation. I mean, seriously, whats 500K compared to 8.5 billion?

The counterpoint is basically, did you see what happened with the global financial crisis and valuations?

Post by encoderer » Tue, May 10, 2011, 8:31 PM UTC

jakarta wrote: post #199

netcan wrote: post #165

Earlier quoted context omitted.

My mother, father, brothers and friends in 3 countries all have skype running most days. Skype have my credit card so I always have skype-to-phone available (I use it mostly to find my cell). It's been that way for me for about 7 years. That means I have skype running and I use it every day (but I only spend about $20 per year). It's not loyalty, but network effects and momentum count for something too. Not sure that…

From the estimates I have seen, Skype generates $250mm in EBIT per year. That would mean that Microsoft is paying 28x earnings. If we want to approximate EBIT as free cash flows (not the same, but this is back of the envelope) and assume a 10% discount rate, to break even Skype would need to be growing EBIT at 6.4% annually for the next 10 years or so. I don't know how achievable that really is, but maybe they could…

Post by lupatus » Tue, May 10, 2011, 9:11 PM UTC

mojuba wrote: post #156

drink wrote: post #154

Strange realization: I am relieved that Microsoft bought this, and not Facebook. Can't remember the last time I was relieved that Microsoft bought a company.

That's really strange. Not being a fan of either, I'd bet Facebook knows a bit more about Internet than Microsoft. Though in the end both are just money making machines with unethical practices. In either case you can expect Skype to become less geek-friendly and more like a surprise box with an evil clown inside.