The debate is still on about Microsoft's acquisition of Skype. Is it a brilliant move or is it a desperate attempt of a once-mighty
company to remain relevant in today's turbulent times. Well, both sides have their quiver full of arrows, but whether it is a mistake or a calculated gamble, Microsoft is now one step closer to make it real. US regulatory agency FTC has given its go-ahead to the company, which effectively means that the merger is not likely to stifle competition and is not expected to go against general public's interests.
Skype has more than 650 million users worldwide but is in red, nonetheless. This makes you wonder why Microsoft decided to spend cool $8.5 billion for this company. But at the very same time, let's not forget yet another internet phenomenon LinkedIn.com, which recently raised about $350 million through its IPO. With less than $2 million in net income, the stock was valued at $45 each, but that was not enough, the stock almost tripled during its debut day, closing at 109% gain over its IPO price. No wonder, market is abuzz is with the rumors of an impending bubble.
The only difference between Skype deal and LinkedIn IPO is that the latter received its money from general public while the former managed to wring out jaw-dropping valuation from one of the most formidable companies in the world. Looks like, Microsoft's finance team did not any more work than the retail investors queuing up for companies like LinkedIn and Groupon. Though, in their defense, Microsoft executives seem to be all gung-ho about potential integration of Skype with its Hotmail Live and Xbox services. Let's just hope Microsoft does not get its hands burnt the way eBay did.