Microsoft’s Skype Deal Gets OK From EU Regulator
Microsoft (NASDAQ:MSFT) announced its plans to buy Skype for $8.5 billion back in May. However, the deal has been awaiting approval by regulatory authorities around the world, and earlier this week, received word that the EU Competition Commission has given its approval. [1] It was already approved by the US Federal Trade Commission some time ago. With Skype, Microsoft can compete with Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) in the mobile space, and Cisco (NASDAQ:CSCO) and LifeSize in the enterprise video conferencing space.
We have already accounted for the Skype acquisition in our Microsoft model. The proposed Skype business account for just under 2% of the $28 Trefis price estimate for Microsoft, which stands nearly 10% above the current market price.
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Skype will add value to Microsoft’s consumer and enterprise offerings
While Skype’s revenues are likely to remain a small portion of its earnings, Microsoft will integrate Skype with almost all of its offerings. Microsoft plans to integrate Skype’s VOIP and chat capabilities with Microsoft Office and Windows as well as Xbox and Windows Phone 7. It will also be integrated with other Microsoft Enterprise offerings to offer comprehensive video conferencing solutions to compete with Cisco and LifeSize.
See: Microsoft’s Skype Deal to Link its Products to Consumers via the Web
Google’s Android and Apple’s iOS already have voice and video offerings like Google Voice and Facetime. With Skype’s integration, Microsoft can offer one with Windows Phone 7 while still having a presence on all major computing and mobile platforms.
Skype currently has more than 700 million users, with close to 145 million monthly active users. We expect it to have around 2 billion users by the end of the forecast period, considering its organic growth rate, and the fact that it will be integrated with all Microsoft offerings.
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Notes:- Microsoft to win approval for Skype deal, Financial Times [↩]