Microsoft pays $8.5 billion to acquire VoIP provider Skype

Just days after rumors started floating that Skype was in the sights of Google (NASDAQ:GOOG) and Facebook as an acquisition target, Microsoft (NASDAQ:MSFT)  today confirmed it had "entered a definitive agreement " to buy VoIP provider Skype Global for $8.5 billion in cash.

Microsoft said the deal increases the accessibility of real-time video and voice communications, bringing benefits to both consumers and enterprise users and generating significant new business and revenue opportunities.

The combination could extend Skype's world-class brand and the reach of its networked platform, while enhancing Microsoft's existing portfolio of real-time communications products and services.

Skype, which had been poised to float a multi-billion dollar IPO, in March reported revenues in 2010 of $860 million, with losses of some $7 million.

The company boasts 170 million connected users and over 207 billion minutes of voice and video conversations in 2010.

Microsoft, of course, has it sown real-time communications platform in Lync, which saw 30 percent revenue growth in the third quarter, Outlook, Messenger, Hotmail and Xbox Live.

The question, of course, is where Skype fits.

Microsoft CEO Steve Ballmer said the acquisition will help Microsoft "create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world."

The nuts and bolts of it have Skype as a business unit inside Microsoft, with Skype CEO Tony Bates becoming president of the Microsoft Skype Division, reporting directly to Ballmer.

Both companies boards have approved the deal, and its expected to close before year's end.

For more:
- see this release

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