Christian Louca

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Posted BY ] DAILY MAIL REPORTER

Microsoft is on the verge of buying Skype for $8.5 billion – despite the Internet phone service making a loss last year.

The deal would be the biggest in the 36-year history of the world’s largest software company.

It could indicate Microsoft’s intention to compete with Apple and Google as it pours resources into the mobile and internet arenas.

Despite doubling sales and profit in the last eight years, Microsoft’s stock has largely languished at the same level, as investors worry about its ability to counter new rivals or adapt to new ways of computing.

Microsoft already has video chat as a function in its Windows Live Messenger service, but it is not available on its Windows Phone 7 software.

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Skype also makes versions of its own service which can be used as an app on the iPhone and iPad, Research in Motion’s BlackBerry and Android phones. It cannot be used on Microsoft phones.

Apple’s FaceTime video calling service — available on its latest iPhone and Mac computers — has been a big hit with consumers.

Google recently followed suit by adding video to its popular Google Talk application for smartphones.

The deal is relatively small for Microsoft, which has $50 billion in cash and short-term investments on its balance sheet.

The $8.5 billion purchase price would likely include the $686 million in long-term debt on Skype’s balance sheet.

‘I think the price is quite reasonable,’ said Sean Lee, a Taipei-based manager of the Global Top Dividend Fund at Shinkong Investment Trust, which owns Microsoft shares.

Luxembourg-based Skype, which had delayed plans for an initial public offering, had recently been looking at other options.

Facebook and Google were separately considering a tie-up with Skype.

Microsoft and Skype declined comment.

Via: http://www.dailymail.co.uk/news/worldnews/article-1385472/Microsoft-set-buy-Skype-8-5bn-biggest-deal-history.html#ixzz1LwjCmCFZ