Microsoft (NASDAQ:MSFT) announced that it has finally closed the acquisition of Skype.^[1] It had announced the acquisition back in May, for $8.5 billion. The deal has already been approved by the US Federal Trade Commission and the EU Competition Commission. It’s still under review in some countries, but is expected to be closed soon. With Skype, Microsoft plans to 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 factored in the Skype acquisition in our model for Microsoft. Skype accounts for under 2% of the total $28 Trefis price estimate for Microsoft, which is around 3% above its current market price.

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Skype may not be a big revenue engine for Microsoft, but it will be a huge strategic asset. Microsoft will be integrating Skype with all its offerings, including Microsoft Office, Windows, Xbox and Windows Phone 7. It will also give Microsoft some headway in the enterprise where it plans to compete with Cisco and LifeSize.

Skype CEO Tony Bates will now be the President of the Skype Division of Microsoft. The Skype division will continue to offer its current products to millions of users globally.

Microsoft CEO Steve Ballmer stated:

Skype is a phenomenal product and brand that is loved by hundreds of millions of people around the world. We look forward to working with the Skype team to create new ways for people to stay connected to family, friends, clients and colleagues — anytime, anywhere.

Skype has more than 700 million users currently. We expect it to have close to 2 billion users by the end of the forecast period. Tweak this chart to see how Skype’s growth could affect Microsoft’s stock price.

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