Microsoft purchases Skype

reghakr

Essential Member
#1
Skype buy was a Microsoft tax dodge

Ballmer gets a win win scenario says analyst


A financial analyst has said that Microsoft's $8.5 billion buy of Skype is a tax dodge and the US taxpayer will end up paying for half the bill.

Larry Elkin, of Palisades Hudson, said that Microsoft's agreement to buy Skype for $8.5 billion may turn out to be a bad bargain but it was corporate genius for Vole's shy and retiring CEO Steve Ballmer.

Thanks to the US tax laws it was completely rational for Ballmer to spend a fortune acquiring a company that makes no cash.

Writing in his bog , Elkin said that Ballmer was sitting on a pile of cash,much of it is overseas as a result of foreign sales.

When outfits have too much cash there is a lot of pressure to return it to shareholders in the form of dividends or share repurchases, or to spend it on expansion and corporate acquisitions.

However tax laws get in the way because if it brings any of the cash into US shores it gets hit by aa U.S. tax rate of 35 percent. Shareholders would only get 65 per cent of the dosh and see other taxes each up a lion's share of the rest.

But if Vole bought Skype, which is incorporated in Luxembourg, the money invested to buy its stock is not considered bought back to the US no American taxes are due.

If Skype makes a killing Ballmer can continue to keep Skype's foreign-generated profits overseas, deferring American taxes indefinitely. If it does not work then Ballmer can tell shareholders that they have not lost much because they would have had to pay the tax anyway.

Neither Google nor Facebook would have thought about paying that much for Skype because it does not have Ballmer's cash problem.

Elkin does not blame Ballmer. He said that bizarre US tax laws make it possible for Ballmer to be extravagant using the taxpayer's cash.

He said that the US made it irrational for Ballmer to invest his company's stockpiled cash domestically, and rational for him to overpay for a corporation based abroad. A thoughtless tax policy has made a bad deal look good.

Read more: Skype buy was a Microsoft tax dodge - Ballmer gets a win win scenario says analyst | TechEye
 


Mike

Windows Forum Admin
Staff member
Premium Supporter
#2
Re: Skype buy was a Microsoft tax dodge

I feel it very unlikely to be a dodgy purchase made for tax reasons. Microsoft has the most cash reserves on hand than any other business in the world for this very reason. Skype is on every Android phone, every iPhone... it is going to change the face of telephony with video chat on phone calls across platforms.

Not only that, but people are using it as a preference to landline due to the low cost. It is the best VoIP solution, and is, in many cases, far superior than corporate installations, but has been heavily adopted by the consumer market. Microsoft will market Skype like no tomorrow.

Here is the problem with all VoIP: It is used in government, it is susceptible to power failure, no emergency services. This makes it a real danger. But when given the option to use a cell phone and also have VoIP, in an office environment Skype could very well be the answer.

No expensive maintenance costs. Skype lowers the outstanding operating cost of telephone use for both the consumer market and a small segment of the business market. It is, arguably, the one VoIP solution that is fairly reliable.

Remember, it is also software based, so here we have the ability to add high definition video to everything... and that is going to be a game changer in my opinion. They know it is the future of telephony. I have for years.

Bill Gates was among those who pushed for Microsoft to take over the Internet calling and video chat service Skype -- which it did last week for $8.5 billion.

When asked on the BBC TV show Hardtalk whether it made sense for Microsoft, the titan of the tech industry that Gates co-founded, to pay more than $8 billion for a company that makes a largely free Web phone system that isn't currently turning a profit and was valued at about a third as much two years ago, Gates said absolutely.

"I was a strong proponent at the board level for the deal being done," said Gates, who serves as Microsoft's chairman. "I think it's a great, great deal for Skype. I think it's a great deal for Microsoft. The idea of videoconferencing is going to get so much better than it is today."

Skype, based in Luxembourg, is used by about 170 million people each month and is Microsoft's largest purchase to date.

In November 2009, the majority of Skype was purchased from then-owner EBay by a group of investment firms led by Silver Lake and Andreessen Horowitz, in a deal that valued the company at about $2.8 billion.

Gates also said in the BBC interview that the decision to buy Skype was one that had implications for the future of Microsoft.

"I'd be the first to say that there's several tech companies including Microsoft, including Apple, including Google, who're doing fascinating work and the importance of software, I think, is more evident to people than it's ever been," Gates said.

"It'll be fascinating to see how the brilliant ideas out of Microsoft research, coming together with Skype, what they can make of that.... It's a great purchase that a lot of innovation will come out of."

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-- Nathan Olivarez-Giles

twitter.com/nateog
Source: Bill Gates says he pushed for Microsoft to buy Skype | Technology | Los Angeles Times
 


reghakr

Essential Member
#3
Re: Skype buy was a Microsoft tax dodge

VoIP and instant messaging service Skype has disappeared from the Internet, nary a fortnight after Microsoft snaffled up the outfit in an overpriced $8.5 billion deal.

I confess to having run Internet publications using Skype as an instant messaging service for over seven years now.

In all that time the service has never once failed - until today. Occasionally when borrowing a machine that uses some sort of VPN we had to resort to other services and once tried Microsoft Messenger. For one-on-one conversations Messenger might be OK, but for collaborative group work it stinks. We came flooding back to Skype.

But now the service has given up the ghost, sending me into an infinite loop as non-functionality on two machines, one running that old dog Vista and one running funky new-fangled WIndows 7.

Trying to reinstall the application turned out to be a non-starter as Free Skype calls and cheap calls to phones - Skype is unavailable at the time of writing.

It didn't take Microsoft long to bugger that up, did it?

We're not the only ones pointing the finger in Redmond's direction, however, Twitter is a light with angry Skypers unable to get online. Here's a small selection of the chatter:

"Looks like the Skype network has crashed. Figures it would only be a matter of time, after Microsoft bought it."

"Microsoft buys Skype -> Skype receives one program update -> Skype starts crashing unexpectedly and at random. Coincidence?"

"RT: #skype, I freakin' hate you!!! you're interrupting my work. please come back!!! #microsoft, I hate you too. it's all your fault!"

"It hasn't been a month since Microsoft acquired Skype and it has started crashing already."

As far as an official response from Skype is concerned, their Twitter feed says: "Some of you may have problems signing in to Skype and making calls. We’re investigating and hope to have more details to share soon."

We'll keep you posted.

Update
Skype's servers spluttered into life long enough to say it's borked. Here's the missive:



Source: Skype crashes and burns | thinq_
 


reghakr

Essential Member
#4
Re: Skype buy was a Microsoft tax dodge

Earlier today, a corruption occured in a small percentage of users' systems that resulted in some of our community not being able to sign in to Skype. We issued some instructions which would allow you to get back online, but understand that they're fairly technical, and have been working hard to produce a version of Skype for Windows which fixes this problem automatically.

If you're using Skype for Windows, and have experienced problems logging in, please update Skype to the latest version now.

We plan to release an update to Skype for Mac tomorrow. Please subscribe to Heartbeat using the links on the right, or follow us on Twitter or Facebook to be notified of updates.

Linux users should follow the instructions for a manual update.

If you're using Skype on your mobile, TV or other device, you should not have been affected by this problem, and should continue to be able to sign in as normal.

We're sorry for any disruption to your calls and chats today.

View blog reactions

Source: An update on today's downtime - Heartbeat
 


Mitchell_A

Essential Member
#5
Re: Skype buy was a Microsoft tax dodge

They have also announced they'll be using some of the technologies to further improve VoIP on both Xbox and the Windows Phone platform. I'll certainly be excited to see what becomes of this deal.

:)
 


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