Wednesday, May 11, 2011

Microsoft Explains Skype Deal: 5 Takeaways



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Amplify’d from www.wallstreetjournal.com
Microsoft CEO Steve Ballmer

1)  Microsoft Will Push Skype on TV, and Everywhere Else: Microsoft CEO Steve Ballmer waxed poetic about expanding the places people can use Skype video and voice calling. Expect Skype to show up in your living room TV through Microsoft’s Xbox and Kinnect videogame consoles.

2)  Microsoft Says: Trust Us. One big question is whether Microsoft will still allow Skype applications to run places controlled by Microsoft competitors – such as iPhone applications, phones using Google’s Android system or Sony Blu-ray DVD players. Ballmer said don’t worry. “I said it and I mean it: we will continue to support non-Microsoft platforms,” he said at the press event. As proof of Microsoft’s intentions, Ballmer pointed to the existence of Macintosh versions for Microsoft’s Office software.

3)  Expect to See Lots More Ads on Skype: The companies said one untapped area of revenue is taking Skype’s more than 663 million registered users and advertise to them. “Given the size of our base…it seems like a natural monetization extension,”  Skype CEO Tony Bates said in the press event, referring to advertising on Skype.

Ballmer chimed in to remind us about Microsoft’s big advertising sales force the companies can use to sell all manner of sight, sound and motion digital commercials. Even absent an outright acquisition for Skype, Ballmer said at the press event he was enthused about an advertising partnership with Skype

4) Microsoft Found a Use for its Overseas Cash: Tech companies have billions of dollars parked in its non-U.S. operations, where the money is outside the watch of the American tax man. Of Microsoft’s nearly $50.2 billion in cash and liquid investments, about $42 billion is held in foreign subsidiaries and would otherwise be subject to a tax hit if the money were brought back to the U.S. Ballmer said it is appropriate to use overseas cash because Skype is headquartered in Luxembourg.

5)  Microsoft Moves Fast. Ballmer & Co. lobbed an unsolicited acquisition offer to Silver Lake, one of Skype’s private owners, around the beginning of April. By last night, Microsoft had a signed deal in hand. That’s remarkable quick deal making for an acquisition of this size.

Read more at www.wallstreetjournal.com
 

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