Microsoft heading for $8bn Skype acquisition

Microsoft is a whisker away from an $8bn deal to buy VoIP firm Skype in its biggest ever foray into the acquisition market, according to a report in The Wall Street Journal.

The deal, which would total around $8.5bn when including Skype's long-term debt, could be signed as early as Tuesday, people familiar with the matter told the paper.

Microsoft's biggest acquisition to date is the $6bn paid in 2007 to buy online advertising firm aQuantive.

The acquisition-shy Microsoft pulled out of a proposed $45bn deal to acquire Yahoo in 2008, in the end deciding on a less risky 10-year search partnership with the firm.

Skype has become the undisputed leading brand in the consumer VoIP space, but doubts remain over its business credentials. In 2005 it was bought in an ill-fated deal by eBay for $2.6bn, but the auction firm was forced to offload it four years later.

Ovum analyst Richard Edwards argued that, although there are products on the market with a better architectural fit, Skype is still "undoubtedly the product Microsoft needs to stay in the game".

"Skype is arguably the most successful real-time social communication platform on the planet, and its $8bn price tag means that only companies such as Microsoft have any chance of acquiring it. But is it a good fit for Microsoft's business model? Answer: Yes," he said.

"It's popular, it runs on Windows PCs, and later this year it will be available on Windows Phone 7. Perhaps more importantly for the rest of us, Skype also runs on other computers, such as Mac and Linux, and mobile phones too, such as iPhone and Android-based devices."

Edwards also emphasised Skype's business services as another attractive feature for Microsoft.

"For enterprises, Skype Connect lets organisations integrate Skype with their SIP-enabled PBX, and Skype Manager enables the business to track, trace and manage the use of this facility by employees," he said.

Skype and Microsoft declined to comment on the rumours.