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The deal is Microsoft's largest cash purchase in its 36-year long history. Regulators in the United States and elsewhere have yet to decide, for instance, whether Skype will have to make it possible for its customers to call 911 and have their locations recognized by emergency responders.Microsoft announced an $8.5 billion acquisition of the Internet telephone service Skype Technologies SA from eBay and a group of private equity investors including Silicon Valley heavyweights Silver Lake Partners. While the purchase will shave about 12 cents off earnings next year, the price paid for Skype is less than 5 percent of eBay's market capitalization of $53 billion.ĮBay will also inherit some of the legal and regulatory challenges facing Skype. "In 1998, we used to see the same thing with the buying of companies that did not have a whole lot of prospects." "Quite frankly, you look at the numbers and you realize there has to be something more for eBay to buy into," said Carmi Levy, an analyst at the Info-Tech Research Group in London, Ontario. Some industry analysts were also skeptical about the high price for a company with so little revenue that is facing increasing competition from other Internet phone providers. The company's shares have fallen 31.7 percent this year, however, because of investor concerns about its slowing growth. Shares in eBay rose 32 cents, to $38.94, on Monday. "This turns the entire telecom industry picture on its head, and demonstrates that voice, presence, text messaging and other I.P.-based applications will be essential for the company of the future," said Jeff Pulver, the chairman of pulvermedia, which promotes Internet-based phone services. Some industry specialists said eBay's purchase of Skype was a sign that voice calls would increasingly become one of many services that Internet companies would provide, rather than a stand-alone business.
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Last month, Google announced Google Talk, a service similar to Skype's free service, and Microsoft said it was acquiring Teleo, a San Francisco company that allows users to call conventional phones from their PC's.
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While Skype is the market leader in peer-to-peer voice software, it is not alone. Only 13 percent of Skype's users are in North America nearly half are in Europe and another quarter are in Asia. To complete these calls, Skype pays phone companies small per-minute fees. In addition to the basic service, about two million Skype customers have signed up for a pay service that allows them to use their computers to make calls to regular phone numbers as well as receive calls from landlines and cellphones. In North America, Skype has more users and carries more voice traffic than any other Internet-based phone provider, the companies said. "Skype is very disruptive to the telecom business and it's one of the reasons people are adopting to it quickly," Mr. Still, with Skype adding 150,000 new users a day, the company represents another threat to established carriers like the Bell companies, which maintain extensive phone and data networks. While eBay will acquire Skype's 54 million users in 225 countries and territories, the company said it was not interested in becoming a telecommunications provider or challenging traditional phone providers. Meg Whitman, chief executive of eBay, said the acquisition did not mean that eBay intended to become a Web portal like Yahoo, Microsoft and Google, which deliver a range of services. The News Corporation, Google and Yahoo had been mentioned as potential suitors in recent months.
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The deal ends months of speculation about who might scoop up Skype, which since 2002 has been offering downloadable software that allows users to talk to one another over the Internet through their personal computers. Though Skype's revenue is expected to grow to about $200 million in 2006, from an estimated $60 million this year, eBay does not expect Skype - which gives its basic PC-to-PC service away free - to turn a profit until the fourth quarter next year. The total value of the deal may grow based on "potential performance-based consideration" that could be worth an additional $1.5 billion, eBay said. EBay said yesterday that it would buy Skype Technologies, the Internet phone provider based in Luxembourg, for $2.6 billion in cash and stock, a move that eBay hopes will bolster trading on its online auction site.