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Microsoft poised to make biggest ever buy – Skype

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Microsoft is close to buying VoIP service Skype for about $8.5bn.

An announcement could come as soon as today according to sources collared by the Wall Street Journal. But the paper cautioned that the deal was not final and may still fall through.

The deal would be Microsoft's biggest ever, costing in the region of $8.5bn including debts. Not that Microsoft is short of cash – it made $5.2bn in profits last quarter and has more than $50bn in the bank or in short-term investments.

Presumably the deal is seen as a way to bolster Microsoft's lacklustre online and mobile businesses. Despite massive marketing spending, Bing is still struggling to find a place in people's hearts, and Windows Mobile also finds itself in third place.

Skype claims 23m concurrent users at busiest times and 124m people a month using the service in some form: how many pay for the privilege is less clear. However the company's costs are low as most of the resources - bandwidth, processing power - used to handle calls are provided by users (or the networks they are on) rather than by Skype itself.

Despite, or perhaps because of, its cunning parasitic P2P architecture, Skype has been the unloved ginger step child of the internet. eBay was forced to write off billions of dollars after buying the service and failing to find any way to integrate it with its core auction business.

The online tat bazaar paid $3bn for Skype before offloading it to Silver Lake Partners and other private investors for $1.9bn

That transaction also settled a patent dispute between company founders Niklas Zennström and Janus Friis and eBay.

Most recently, rumours were that Google or Facebook could be interested – here's Matt Asay's explanation of why they should walk away, which is well worth a read.

A Microsoft spokeswoman told us: "Microsoft does not comment on rumour or speculation." ®

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