Microsoft has agreed to buy the phone network company Skype for almost six billion euros – in cash.
The Skype system, which enables people to make voice and video calls, at no charge, over the internet, is popular with over 660 million users, but has never made a profit and has only eight million paying customers.
The purchase gives Microsoft’s gives it a foothold in the potentially lucrative video-conferencing market and means it can become a bigger force in the increasingly important smartphone market.
The Skype deal, the biggest in Microsoft’s 36-history, is still small beer for an company with cash reserves of 35 billion euros.
However analyst are divided on whether this is a good deal. Some feel the price was high for a company whose ownership has changed several times during its relatively short life.
Skype, which delayed plans for an initial public offering of shares, has been looking at other options, including tie-ups with Facebook and Google.
Despite doubling sales and profit in the last eight years, Microsoft’s share price has been hit by investors’ worries about its ability to counter new rivals or adapt to new ways of computing, especially the threat posed by new mobile devices.