Microsoft Set to Acquire Skype: Report

Microsoft is close to finalizing a deal to buy Internet phone company Skype Technologies for over US$7 billion, and a deal could be announced by Tuesday, according to a news report.

Buying Skype would give Microsoft a recognized brand name on the Internet at a time when it is struggling to get more traction in the consumer market, The Wall Street Journal said in a report late Monday.

Microsoft and Skype could not be immediately reached for comment. Both companies declined to comment to the WSJ.

Facebook, Cisco, and Google were also considering partnering or acquiring Skype, according to earlier news reports.

Despite being a well-recognized Internet brand among online users, Skype ran a loss last year. The company, which was founded in 2003, posted last year revenue of US$860 million and $264 million in operating profits, but still lost $7 million, according to WSJ. The company had $686 million in long-term debt as of Dec. 31.

Skype announced in August that it had filed with the Securities and Exchange Commission for a proposed initial public offering (IPO) of its ordinary shares. It put its IPO plans on hold after appointing in October a new chief executive, Tony Bates, who was earlier a senior vice president at Cisco.

The company is currently owned by an investor group led by Silver Lake, and which includes among others eBay Inc, and Skype founders Niklas Zennstrom and Janus Friis, it said on its web site.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John’s e-mail address is john_ribeiro@idg.com