Why's it silly? He's buying a commodity business (thats what VOIP is) for 32x earnings.
There's a reason M&A is often referred to as a winner's curse -- because winning the bidding typically means overpaying. The synergies execs often talk about almost -always- fail to be realized.
Shareholders of Microsoft would have been much better off if the company just bought back $8.5bn in stock. A dividend would have been out of the question due to tax repatriation issues.
There is a significant difference between bringing in a new product and having that product be a part of the standard install on every laptop/desktop from the perspective of Enterprise IT.
Yes, but wouldn't that get them in trouble because of the anti-monopoly laws? If I remember correctly, they got sued just for bundling IE with Windows, right?
Do you have a source for "32x earnings"? I suspect it's even worse than that. In other HN thread someone mentioned the price was about 300x earnings, and via google I could find this:
Skype's revenues for the first six months of 2010 were $406 million, with a net income of only $13 million.
Not only a commodity business, a declining one. A specialized desktop application to chat. Hello, it's 2011, people do web-based peer-to-peer video chat for free. Just, ask the Chatroulette users. Free.
I bet this will go down as one of the most stupid buyouts in history.
Skype is free for video chat too. And I must say it's worth every penny for its phone line in service when compared to free offerings like Google Voice.
There's a reason M&A is often referred to as a winner's curse -- because winning the bidding typically means overpaying. The synergies execs often talk about almost -always- fail to be realized.
Shareholders of Microsoft would have been much better off if the company just bought back $8.5bn in stock. A dividend would have been out of the question due to tax repatriation issues.