Microsoft Buys Skype For $8.5B

Microsoft announced today that it is buying digital voice and video communications company SKYPE for $8.5 billion dollars. The deal is the biggest in Microsoft's history, second to it's $6 billion acquisition of advertising firm, aQuantive.

Skype will be a new business division at Microsoft led by existing CEO Toni Bates.

The company was founded in 2003 by the developers of the Kazaa peer to peer file sharing service . In 2005 eBay purchased a majority stake for $3 billion and later sold it four years later for $2 billion to several investors including Mark Andreesen, the developer of the Netscape browser.

Skype has more than 170 million customers internationally who use the service for making affordable digital voice and video teleconferencing calls.

After the announcement, news of the deal hit Wall Street sending the Nasdaq composite slightly up. As of this writing, Microsoft was trading down $0.32/share at $25.50 while eBay was trading up $0.75/share at $33.84.

About Kerry Kobashi

Kerry is the founder of KerryOnWorld. He lives in Silicon Valley and has worked as an engineer and project manager. He owns Kobashi Computing a consulting company.