Microsoft acquired Skype for $8.5 billion in cash in 2011. This was Microsoft's largest acquisition to date and helped enhance its portfolio of real-time communications products and services. It provided an opportunity for Microsoft to integrate Skype with its other platforms like Windows Phone, Office and Xbox, and to monetize Skype's large user base through advertising and premium subscriptions. The acquisition also prevented competitors like Google and Facebook from acquiring Skype and helped Microsoft gain a foothold in the growing VoIP and video communications market.
Full strategic case analysis for Apple incorporation including industry , competitor's and firm's self analysis. It covers all the strategic issues facing the industry and Apple inc. as well as the recommended solutions for these issues on business and corporate levels.
The study shows the development on the Apple Inc. mission& vision and the strategic objectives over time.
Toko Bunga Surabaya, Jual Karangan Bunga Surabaya, Jual Bunga Papan Surabaya, Jual Bunga Ucapan Surabaya, Jual Rangkaian Bunga Surabaya, Jual Buket Bunga Surabaya, Bunga Ucapan Selamat, Bunga Ucapan Duka Cita, Bunga Papan Selamat, Bunga Papan Duka Cita
Full strategic case analysis for Apple incorporation including industry , competitor's and firm's self analysis. It covers all the strategic issues facing the industry and Apple inc. as well as the recommended solutions for these issues on business and corporate levels.
The study shows the development on the Apple Inc. mission& vision and the strategic objectives over time.
Toko Bunga Surabaya, Jual Karangan Bunga Surabaya, Jual Bunga Papan Surabaya, Jual Bunga Ucapan Surabaya, Jual Rangkaian Bunga Surabaya, Jual Buket Bunga Surabaya, Bunga Ucapan Selamat, Bunga Ucapan Duka Cita, Bunga Papan Selamat, Bunga Papan Duka Cita
Content
I. Introduction
II. Company overview
III. Products and services
IV. Main competitors 2015
V. Profitability and US market share 2013
VI. Market Segmentation
VII. SWOT analysis
VIII. Google innovative corporate culture
IX. Business strategy
a) Early success
b) Google’s way of business expansion
c) 4Es of Google strategy
Researched Netflix's existing market and recommended strategies for them to develop.
Conducted SWOT analysis, product and market analysis
Based on their market growth ad financial overview, developed marketing strategies
Developed BCG Matrix and understood Porter 5 forces to estimate the competitive strategy
Apple inc. Strategic Case Analysis PresentationMahy Helal
Full strategic case analysis for Apple incorporation including industry , competitor's and firm's self analysis. It covers all the strategic issues facing the industry and Apple inc. as well as the recommended solutions for these issues on business and corporate levels.
The study shows the development on the Apple Inc. mission& vision and the strategic objectives over time.
This presentation will cover the history of apple inc, growth of apple, most important acquisition, market capitalization, competitors of apple, products and services of apple and coverage area of apple.
Final Master's Thesis about Microsoft's Skype acquisition. On may 2011, Microsoft agreed to buy Skype for $8.5 billion dollars, making it, Microsoft's largest acquisition.
Content
I. Introduction
II. Company overview
III. Products and services
IV. Main competitors 2015
V. Profitability and US market share 2013
VI. Market Segmentation
VII. SWOT analysis
VIII. Google innovative corporate culture
IX. Business strategy
a) Early success
b) Google’s way of business expansion
c) 4Es of Google strategy
Researched Netflix's existing market and recommended strategies for them to develop.
Conducted SWOT analysis, product and market analysis
Based on their market growth ad financial overview, developed marketing strategies
Developed BCG Matrix and understood Porter 5 forces to estimate the competitive strategy
Apple inc. Strategic Case Analysis PresentationMahy Helal
Full strategic case analysis for Apple incorporation including industry , competitor's and firm's self analysis. It covers all the strategic issues facing the industry and Apple inc. as well as the recommended solutions for these issues on business and corporate levels.
The study shows the development on the Apple Inc. mission& vision and the strategic objectives over time.
This presentation will cover the history of apple inc, growth of apple, most important acquisition, market capitalization, competitors of apple, products and services of apple and coverage area of apple.
Final Master's Thesis about Microsoft's Skype acquisition. On may 2011, Microsoft agreed to buy Skype for $8.5 billion dollars, making it, Microsoft's largest acquisition.
Merger & Acquisition of HDFC Bank with Centurian Bank of PunjabRohan Solanki
The slides show the details of the largest merger in Indian banking sector between HDFC Bank and CBoP.
The benifits and the side effects of the merger are also highlighted in the following presentation
To proof the Polish meat industry is attractive for portfolio investment.
1. Current macroeconomic situation in Poland
2. Institutional overview
3. Market overview (SWOT analysis of sector, BCG matrix)
4. Corporate analysis of Indykpol and "ZM Henryk Kania"
5. The comparative ratio analysis of Slovakian, German, Hungarian, Czech and Ukrainian, meat companies with Polish representatives on the market.
6. Regression model ( Determining significant production factors that have impact on the production. We assume the higher production, the more attractive the market is. )
WCP Research identifies key software industry trends including solid growth over the last five years; BYOD growing as employees and managers and employees choose their own devices; and Big Data accelerating in 2013. Salesforce.com makes a big bet on marketing cloud, while Oracle announces surprising partnerships with Salesforce.com and Microsoft.
Software is changing the way traditional business operate. People now have smartphones in their pockets - a supercomputer that is 25,000 times more powerful and the minicomputers of the 1960s. This is changing people´s behaviour and how people shop and use services. The organizational structure created in the 20th century cannot survive when new digital solution are being offered. Software is changing the way traditional business operate. People now have smartphones in their pockets - a supercomputer that is 25,000 times more powerful and the minicomputers of the 1960s. This is changing people´s behaviour and how people shop and use services. The organizational structure created in the 20th century cannot survive when new digital solution are being offered. The hierarchical structure of these established companies assumes high coordination cost due to human activity. But when the coordination cost drops
The organizational structure that companies in the 20th century established was based on the fact that employees needed to do all the work. The coordination cost was high due to the effort and cost of employees, housing etc. Now we have software that can do this for use and the coordination cost drops to close-to-zero. Another thing is that things become free. Consider Flickr. Anybody can sign up and use the service for free. Only a fraction of the users get pro account and pay. How can Flickr make money on that? It turns out that services like this can.
Many businesses make money by giving things away. How can that possibly work? The music business has suffered severely with digital distribution of content. Should musicians put all there songs on YouTube? What is the future business model for music?
Telecommunications Industry Newsletter | February 2019Rick Lievano
The Microsoft Worldwide Telecommunications Industry team is pleased to share with you the February 2019 Telecommunications Industry newsletter, available to both internal and external audiences. We encourage you to share it with your colleagues and distribute it to your customers and partners as appropriate. As always, we welcome your input, feedback and suggestions!
Social Media, Cloud Computing and architectureRick Mans
Slides for a guest lecture on the impact of social media and cloud computing on system architecture. Key is the crown model which enables you to personalize your offerings while still using the 'comply' layer with enterprise applications.
Microsoft's Joe Belfiore (Vice President, eHome division) hosts this overview of your options for boosting revenues by building "sticky" experiences that follow the user outside the browser, into the living room and on the go. Some of the specific technologies that will be discussed include: RSS, the Windows Sidebar, Office "12", Windows Mobile™ and Windows Media Center/Xbox 360.
Financing & Managing Infrastructure Development in India, Risk Mitigation in Model Concession Agreement & Financial Implications on different Shareholders
DevOps and Testing slides at DASA ConnectKari Kakkonen
My and Rik Marselis slides at 30.5.2024 DASA Connect conference. We discuss about what is testing, then what is agile testing and finally what is Testing in DevOps. Finally we had lovely workshop with the participants trying to find out different ways to think about quality and testing in different parts of the DevOps infinity loop.
JMeter webinar - integration with InfluxDB and GrafanaRTTS
Watch this recorded webinar about real-time monitoring of application performance. See how to integrate Apache JMeter, the open-source leader in performance testing, with InfluxDB, the open-source time-series database, and Grafana, the open-source analytics and visualization application.
In this webinar, we will review the benefits of leveraging InfluxDB and Grafana when executing load tests and demonstrate how these tools are used to visualize performance metrics.
Length: 30 minutes
Session Overview
-------------------------------------------
During this webinar, we will cover the following topics while demonstrating the integrations of JMeter, InfluxDB and Grafana:
- What out-of-the-box solutions are available for real-time monitoring JMeter tests?
- What are the benefits of integrating InfluxDB and Grafana into the load testing stack?
- Which features are provided by Grafana?
- Demonstration of InfluxDB and Grafana using a practice web application
To view the webinar recording, go to:
https://www.rttsweb.com/jmeter-integration-webinar
Transcript: Selling digital books in 2024: Insights from industry leaders - T...BookNet Canada
The publishing industry has been selling digital audiobooks and ebooks for over a decade and has found its groove. What’s changed? What has stayed the same? Where do we go from here? Join a group of leading sales peers from across the industry for a conversation about the lessons learned since the popularization of digital books, best practices, digital book supply chain management, and more.
Link to video recording: https://bnctechforum.ca/sessions/selling-digital-books-in-2024-insights-from-industry-leaders/
Presented by BookNet Canada on May 28, 2024, with support from the Department of Canadian Heritage.
Essentials of Automations: Optimizing FME Workflows with ParametersSafe Software
Are you looking to streamline your workflows and boost your projects’ efficiency? Do you find yourself searching for ways to add flexibility and control over your FME workflows? If so, you’re in the right place.
Join us for an insightful dive into the world of FME parameters, a critical element in optimizing workflow efficiency. This webinar marks the beginning of our three-part “Essentials of Automation” series. This first webinar is designed to equip you with the knowledge and skills to utilize parameters effectively: enhancing the flexibility, maintainability, and user control of your FME projects.
Here’s what you’ll gain:
- Essentials of FME Parameters: Understand the pivotal role of parameters, including Reader/Writer, Transformer, User, and FME Flow categories. Discover how they are the key to unlocking automation and optimization within your workflows.
- Practical Applications in FME Form: Delve into key user parameter types including choice, connections, and file URLs. Allow users to control how a workflow runs, making your workflows more reusable. Learn to import values and deliver the best user experience for your workflows while enhancing accuracy.
- Optimization Strategies in FME Flow: Explore the creation and strategic deployment of parameters in FME Flow, including the use of deployment and geometry parameters, to maximize workflow efficiency.
- Pro Tips for Success: Gain insights on parameterizing connections and leveraging new features like Conditional Visibility for clarity and simplicity.
We’ll wrap up with a glimpse into future webinars, followed by a Q&A session to address your specific questions surrounding this topic.
Don’t miss this opportunity to elevate your FME expertise and drive your projects to new heights of efficiency.
Search and Society: Reimagining Information Access for Radical FuturesBhaskar Mitra
The field of Information retrieval (IR) is currently undergoing a transformative shift, at least partly due to the emerging applications of generative AI to information access. In this talk, we will deliberate on the sociotechnical implications of generative AI for information access. We will argue that there is both a critical necessity and an exciting opportunity for the IR community to re-center our research agendas on societal needs while dismantling the artificial separation between the work on fairness, accountability, transparency, and ethics in IR and the rest of IR research. Instead of adopting a reactionary strategy of trying to mitigate potential social harms from emerging technologies, the community should aim to proactively set the research agenda for the kinds of systems we should build inspired by diverse explicitly stated sociotechnical imaginaries. The sociotechnical imaginaries that underpin the design and development of information access technologies needs to be explicitly articulated, and we need to develop theories of change in context of these diverse perspectives. Our guiding future imaginaries must be informed by other academic fields, such as democratic theory and critical theory, and should be co-developed with social science scholars, legal scholars, civil rights and social justice activists, and artists, among others.
Key Trends Shaping the Future of Infrastructure.pdfCheryl Hung
Keynote at DIGIT West Expo, Glasgow on 29 May 2024.
Cheryl Hung, ochery.com
Sr Director, Infrastructure Ecosystem, Arm.
The key trends across hardware, cloud and open-source; exploring how these areas are likely to mature and develop over the short and long-term, and then considering how organisations can position themselves to adapt and thrive.
"Impact of front-end architecture on development cost", Viktor TurskyiFwdays
I have heard many times that architecture is not important for the front-end. Also, many times I have seen how developers implement features on the front-end just following the standard rules for a framework and think that this is enough to successfully launch the project, and then the project fails. How to prevent this and what approach to choose? I have launched dozens of complex projects and during the talk we will analyze which approaches have worked for me and which have not.
The Art of the Pitch: WordPress Relationships and SalesLaura Byrne
Clients don’t know what they don’t know. What web solutions are right for them? How does WordPress come into the picture? How do you make sure you understand scope and timeline? What do you do if sometime changes?
All these questions and more will be explored as we talk about matching clients’ needs with what your agency offers without pulling teeth or pulling your hair out. Practical tips, and strategies for successful relationship building that leads to closing the deal.
Software Delivery At the Speed of AI: Inflectra Invests In AI-Powered QualityInflectra
In this insightful webinar, Inflectra explores how artificial intelligence (AI) is transforming software development and testing. Discover how AI-powered tools are revolutionizing every stage of the software development lifecycle (SDLC), from design and prototyping to testing, deployment, and monitoring.
Learn about:
• The Future of Testing: How AI is shifting testing towards verification, analysis, and higher-level skills, while reducing repetitive tasks.
• Test Automation: How AI-powered test case generation, optimization, and self-healing tests are making testing more efficient and effective.
• Visual Testing: Explore the emerging capabilities of AI in visual testing and how it's set to revolutionize UI verification.
• Inflectra's AI Solutions: See demonstrations of Inflectra's cutting-edge AI tools like the ChatGPT plugin and Azure Open AI platform, designed to streamline your testing process.
Whether you're a developer, tester, or QA professional, this webinar will give you valuable insights into how AI is shaping the future of software delivery.
Smart TV Buyer Insights Survey 2024 by 91mobiles.pdf91mobiles
91mobiles recently conducted a Smart TV Buyer Insights Survey in which we asked over 3,000 respondents about the TV they own, aspects they look at on a new TV, and their TV buying preferences.
Builder.ai Founder Sachin Dev Duggal's Strategic Approach to Create an Innova...Ramesh Iyer
In today's fast-changing business world, Companies that adapt and embrace new ideas often need help to keep up with the competition. However, fostering a culture of innovation takes much work. It takes vision, leadership and willingness to take risks in the right proportion. Sachin Dev Duggal, co-founder of Builder.ai, has perfected the art of this balance, creating a company culture where creativity and growth are nurtured at each stage.
Builder.ai Founder Sachin Dev Duggal's Strategic Approach to Create an Innova...
Microsoft-Skype
1. Group 9
Soumyajit Sengupta 12P171
Aneesha Chandra 12P186
Arunabh Thakur 12P190
Karthik Kollipalli 12P204
Mergers & Acquisitions, Section B
A POSSIBLE SUCCESS STORY IN THE MAKING
Microsoft‟s Acquisition of Skype
3. Technology Industry Scenario
2010-11 : The Recovery Era
Period of Recovery - Renewed
Optimism and Strengthening balance
sheets
Increasing spending on IT products and
services
Consumers expected to spend $2.1
trillion on technology products and
services worldwide
Key Trends
Consolidation ( Expansion into new
technology, Industry and Geographies)
Licensed Software(SaaS)
Virtualisation (VoIP)
Top 13 deals ($1 billion +) of the top 100
global technology companies, full-year 2010
Opportunities
Cloud Services
Security products and services
Healthcare IT markets
Virtualization products and services
Mobile services (expected to generate
37% of total worldwide consumer
technology spending in 2012)
Entertainment Services
Tech Market Factors: Economic Growth Versus
New Tech Adoption By Country
4. VoIP Industry Scenario
2010-11 : Fastest growing Industry in U.S
Growth of 12.6% in 2010
Industry expected to grow by 16-17% in
the next 5 years
Key Drivers
Cost Savings and Greater efficiencies
Increasing Global Network and Wireless
bandwidth capabilities (3G)
Increased adoption by China, Japan,
South Korea
VoIP aligning with cost cutting strategy of
firms post recession
Expanding SMB and enterprise offerings.
VoIP, video conferencing and real-time
communication capabilities
Key Trends
Strategic Collaboration & Integration
Hardware Providers (Avaya , Verizon
with Skype)
Technology (Facebook with Skype)
Mobile Operators (KDDI Japan with
Skype)
Technology Compatibility (Ex: Skype
for Android)
M&A on the rise
Challenges
Regulatory Compliance (Open Internet
Access)
Quality and Reliability of VoIP services
Free Business Models
Announcement Date Acquirer Target Company
Feb-10 Comcast New Global Telecom
May-10 Google, Inc. Global IP Solutions, Inc.
Oct-10 ShoreTel Agito Networks
Nov-10 M5 Networks Geckotech
Nov-10 Cbeyond, Inc. Aretta Communications
Apr-11 M5 Networks Callfinity
Apr-11 West Corporation Smoothstone IP
May-11 Microsoft Skype
Jun-11 USAN, Inc. Interactive Softworks, Inc.
Jul-11 Interactive Intelligence CallTime Solutions
Sep-11 8x8 Inc. Contactual Inc.
Sep-11 Broadsoft iLinc Communications
Oct-11 Avaya, Inc. Sipera Systems, Inc
Dec-11 Stage 2 Networks hosted division of CTI
Dec-11 Warwick Valley Telephone Alteva
5. Microsoft – Company Profile
Company Overview
Incorporated on September 22, 1993
Involved in developing, supporting and
licensing an array of software products and
services
Also works to design and sell hardware, and it
delivers online ads to the customers
Number of employees: 90000 Full Time
54000 US and 36000 International
35000 Product research, 250000 Sales and
Marketing, 16000 product support, 5000
manufacturing
VISION
To help people and
businesses throughout
the world to realize
their full potential
Key Divisions
Windows and Windows Live
Develops and markets PC
operating systems, PC
hardware products and
related software and
online services
Products – Windows 7,
Windows Live, hardware
Competitors – Apple,
Google, Yahoo!
Server and Tools
Develops and markets
server software, services,
software developer tools,
and solutions
Products – SQL server,
Intune, Visual Studio,
Silverlight
Competitors – HP, Oracle,
IBM, Adobe, Intel, Google,
SAP
Microsoft Business Division
Develops products that
are designed for
increasing personal,
organizational and team
productivity
Products – Office, Lync,
SharePoint and Exchange
Competitors – Adobe,
Apple, Corel, Google,
IBM, Oracle
Entertainment and Devices
Develops and markets
products and services
designed to entertain and
connect people
Products – Xbox, Kinect,
Mediaroom, Windows
Phone
Competitors – Nintendo,
Sony, Apple, Google
Online Services
Develops and markets
information and
content designed to
help people simplify
tasks online, and help
advertisers to connect
with audience
Products – Bing, Atlas,
MSN and ad Centre
Competitors – Google,
Yahoo
Acquisition History
Microsoft acquires an average of 6
companies per year
Acquired 18 companies in 2006
Some notable acquisitions are:
Forethought – Created Microsoft
PowerPoint
Hotmail – Free webmail service
Navision – Developed technology for
ERP software
aQuantive – advertising company
6. Skype – Company Profile
Company Overview
Global technology leader that enables real-
time communication over the Internet
The software-based communications platform
offers high-quality, easy-to-use tools for
consumers and businesses to communicate
and collaborate globally through voice, video
and text conversations
663 million registered users, out of which 8.8
million are paying users
During 2010, Skype‟s users
made 207 billion minutes of voice and
video calls using Skype
Sent over 176 million SMS text messages
through Skype
Video calls accounted for approximately 42%
of all Skype-to-Skype minutes
Strategic Relationships with leading mobile
operators (Verizon Wireless in USA, KDDI in
Japan)
Uses peer-tp-peer architecture which gives
them a significant cost advantage as no
physical communications network required
Products and Features
Mobiles – Skype‟s products are on
multiple platforms including iOS,
Blackberry, Linux, Android and Symbian
Integrated Features – Integrated with
Facebook
Premium Products – Additional features
like group video calling, live chat
customer support, discount on HD
webcams, etc.
Marketing Services, including Advertising
- Allows businesses to market their
products or services selectively to
Skype‟s user base, including Click & Call,
which enables users to initiate a Skype
call from a website to participating
businesses
Skype Enterprise- Skype Manager allows
businesses to manage Skype accounts
for their employees; Skype Connect
allows businesses to connect their
private telephone branch exchange
(PBX) over the Internet to the peer-to-
peer network of Skype users to achieve
low-cost calling
Competitive Strengths
Large, highly engaged, growing and
diverse global user base
Strong network effects
String communications brand
Low cost and highly scalable peer-to-
peer architecture
High-quality, multi-feature voice and
video product suite
Payment infrastructure
Software platform that is device and
network agnostic
Attractive financial structure
Key Shareholders
Silver Lake
eBay International AG
Joltid
Canada Pension Plan Investment Board
Andreessen Horowitz
8. Deal Rationale
Enhances Microsoft‟s portfolio of real-time communications products and services
Microsoft had a long-standing focus on real-time communications across its various
platforms including Lync, Outlook, Messenger, Hotmail and Xbox Live
“Increases the accessibility of real-time video and voice communications, bringing benefits
to both consumers and enterprise users and generating significant new business and
revenue opportunities”
Cross-selling the vast array of Microsoft family products to Skype users
The key opportunities would be core communications service,, new premium subscription
packages (monetization), in-app advertising and mobile space
Allows integration of Skype with Windows Phone, Nokia and Windows Office making it a
competitive offering to Google Voice and Apple‟s emerging communication platform,
Facetime
Skype‟s peer-to-peer video chat adds another potentially more efficient and easier way
to place video calls
Microsoft lags in new fields like smart-phone software
Microsoft‟s current platforms are client-server systems
Peer-to-peer technology is better suited to the cloud computing era
9. Deal Rationale (contd.)
Skype‟s video, voice and sharing capabilities would give Microsoft a boost in
enterprise collaboration market
Allows Microsoft to compete against Cisco and Google
Creation of Microsoft-Skype World
Skype will support Microsoft devices like Xbox, Kinect, Windows Phone etc.
Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other
communities
Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms
Microsoft saves time and effort in building out its own VoIP infrastructure
Gives Microsoft a working relationship with carriers who are looking to partner
with Skype as they start to transition to LTE-based networks
Skype is a must-have application and service which will help in the adoption of
the future versions of Windows Mobile operating system
10. Deal Rationale (contd.)
Skype is a great brand, especially for customers
Allows Microsoft to revive its internet advertising revenue
Prevents Google and Facebook from acquiring Skype (There were rumours that
these companies were interested in Skype)
Allows Microsoft to hold onto SOHO/SMB market
Skype had a huge user base of more than 660 million users, including more than
120 million active or “connected” users
Rate of growth of users is 40% per annum
Microsoft had huge cash balances of around USD 50 billion
As an economic transaction, Microsoft was able to acquire Skype on a tax
efficient basis using offshore cash
As Skype is based in Luxembuorg, the corporate tax rate applicable is 25.2% (US
corporate tax rate is 39%!)
80% of Microsoft‟s cash balances are abroad
11. Deal Modalities
On 10 May, 2011, Microsoft announced that it would be acquiring Skype
Total consideration would be $8.5 billion in cash
Skype will become a new division of Microsoft with the Skype CEO, Tony
Bates heading the newly created division.
Microsoft‟s largest acquisition till date, surpassing the $6 billion paid for
aQuantive
The division of the consideration between Skype‟s shareholders –
Silver Lake and other investors – $4.76 billion for 56% stake which they
purchased from eBay for $1.9 billion in 2009
eBay – $2.55 billion for 30% stake (they had acquired Skype in 2005 for $2.6
billion and sold it for 1.9+2.55 = $4.45 billion)
Skype‟s founders - $1.19 billion for 14% stake
12. Key Risks for Microsoft
The rates of net revenue growth may decline
The rate at which registered, connected and paying users are added may
decline
Failure in converting registered users in paying users
Number of registered and connected users may be overstated
Most of the products of Skype are free and a small proportion of the users are
paying users. Thus, even a small decline in the paying users has a major impact
on the revenue generated
Highly competitive industry characterized by rapid technological changes
Emergence of new competitors/technologies may make Skype obsolete
Regulation of Internet communications products
Possibility of Skype getting banned in countries (e.g. Already banned in UAE,
Egypt)
Brand value can be affected if users concerns about the use and protection of
personal data and privacy of their communications
13. Reaction to Acquisition Announcement
Microsoft’s share price declined by 0.5% to $25.68
on the day of announcement
eBay’s share price increased by 2.5%
14. Reasons Behind Negative Reaction
Skype did not seem to improve Microsoft‟s revenues and profitability majorly
The valuation of Skype was very high (10x revenues and 34x EBITDA v/s the industry average of 7x-8x EBITDA), given the Y-
o-Y revenue growth of just 20%
Given that there was no actual bidding war and that Microsoft‟s bid was launched to pre-empt Skype‟s investors from an
IPO, offering USD 8.5 billion was too high
Skype itself had insisted USD 7 billion as the starting point of negotiations
Success of this acquisition depends on whether Microsoft can convert the thrifty Skype users into future Microsoft
revenues
Skype‟s revenue per user is low
Only 8.8 million Skype users out of 663 million users were paying customers (a meagre 1.3% of total users)
There can be several integration issues
Microsoft‟s acquisitions have generally led to entry into new businesses with minimal overlap with the existing
business
In case of Skype, Microsoft would have to integrate several technologies and products for this acquisition to work
Microsoft‟s bureaucratic structure may create hurdles in the path of successful integration
The timing of the purchase was not right as the stock market had fully rebounded in 2011
As Microsoft had its large cash balances in 2009 and 2010, it would have been a better time for the same deal
Peer-to-peer technology takes up a lot of bandwidth and was considered inefficient
16. Previous Acquisitions by Microsoft
Landmark Acquisitions
Company Deal Value Deal Rationale Success factors Failure Factors
Success
Rate
Forethought $ 14 Mn
To add presentation program to
portfolio of Ms Office
To give the company presence in
Silicon Valley
Creation of PowerPoint
Gave Microsoft a Silicon
Valley presence
Acquired a talented
pool
Hotmail $500 Mn
To have a complete portfolio of free
email and search engine
To drive traffic to its revenue-
generating sites by keeping users within
the Microsoft circle
Increased scalability of
service
Increase in number of
members
Higher traffic on other
Microsoft sites like
Expedia
Growth of Gmail
Hotmail lacked the
unlimited storage and
clean and professional
interface of Gmail
Navision $1.3 Bn
To provide the strongest .NET
applications and development
platforms, including extensible
accounting solutions based on the .NET
platform
Microsoft Dynamics NAV
became a successfully
recognized global
solution
Change of name was
detrimental
17. Company Deal Value Deal Rationale Success factors Failure Factors
Failure/
Success
Aquantive $6 Bn
To compete with Google and other
rising computer companies by giving
it exposure to search-based
advertising
Focus was made on search
advertising whereas aquantive
specialized in display advertising;
Aquantive started lagging behind
rivals
Danger $500 Mn
To get a perfect complement to
Microsoft‟s existing software and
services
To improve mobile experiences
Talented workforce with rich
experience in what customer
want from a mobile
Another department set to build
Windows 7; Made danger useless;
Internal fighting
Fast Serve $1.2 Bn
To gain proficiency in enterprise
search which was becoming an
indispensable tool to businesses of all
sizes, helping people find, use and
share critical business information
quickly
Deep talent pool expertise in
high-end search solutions
Increased Microsoft‟s
research and development
presence in Europe
Lack of due diligence – the
company was charged with
accounting fraud and raided by
police few months later
Greenfield
Online
$486 Mn
To extend Microsoft's search and e-
commerce services in Europe
Gain in market share in
Europe
3DV $35 Mn
To gain a stronger foothold in the
video game console market by use
of 3D animatronics.
Xbox Connect uses 3D
sensors for its operation
Allowed it to compete with
Nintendo Wi
Previous Acquisitions by Microsoft
Recent Acquisitions
18. Previous Acquisitions by Microsoft
Minority Stake Acquisition
Company
Deal
Value
Stake Size Deal Rationale For Microsoft Deal Rationale For Company Success Factors
Overall
Success
Facebook $240 Mn 1.60%
Keeping Google at bay
Gain cachet in the
burgeoning internet
economy
Facebook can hire more
employees, build its
website and handle more
traffic
Microsoft will get exclusive
rights to sell advertising on
Facebook, which presently
has little revenue-raising
content
Apple $150 Mn
150,000
shares
Patent and technology
cross-licensing agreements
between Apple and
Microsoft
Apple agreeing to install
Internet Explorer as the
default Web browser on all
Macs,
Bail out for Apple which
would have otherwise
gone bankrupt leaving
Microsoft to have a
monopoly
Turnaround of Apple meant
high growth in stock prices
which would have allowed
Microsoft to earn
considerably higher profits
when compared to the $8
at which Microsoft bought it
19. Key Takeaways
Microsoft has had a series of both successful and not so successful
acquisitions in the past
A key point to note is that most of the recent acquisitions have not
performed that well
Integration is not one of Microsoft‟s fortes and in case of Skype, the
pace and extent of cultural and technological integration can
make-or-break this deal
21. Skype Valuation
Transaction Comparables
Acquirer Target
Paid User Base
(in '000s)
Deal Value
(In $ Millions)
Equity Value/
User Base
Telanetix AccessLine 100 34.9 0.35
Google Global IP Solutions 150 68.2 0.45
Google Gizmo5 6,000 30.0 0.01
Google On2 Technologies 100 106.0 1.06
ShoreTel Agito Networks 190 11.4 0.06
Intermedia Telanetix 290 42.0 0.14
Median 0.25
Paid User Base of Skype (in „000s) = 8,800
Estimated Equity Value = $2.173 billion
Premium Paid by Microsoft = 291.2%
22. Skype’s revenues have been growing at a CAGR of 55% after
Microsoft’s acquisition. Thus, Microsoft actually just paid a
premium of 14%!
Skype Valuation
Discounted Cash Flow
Historical financial data for 2009-2011
based on Skype‟s SEC filing on March 4,
2011
Key assumptions:
WACC for initial years = 12%
Terminal WACC = 6%
Revenue CAGR for next 5-years =
35%
Terminal Growth Rate = 3%
Equity Value = $2.27 billion
Premium Paid by Microsoft = 274.4%
Terminal Period Growth
TerminalWACC
1% 2% 3% 4% 5%
2% 10526.0 NM NM NM NM
4% 2624.1 4285.0 9268.1 NM NM
6% 1089.8 1532.6 2270.6 3746.6 8174.7
8% 458.6 646.5 909.6 1304.1 1961.6
10% 124.4 222.4 348.4 516.3 751.3
Sensitivity Analysis
Equity Value (in $ million)
Estimates
Revenue
CAGR 2011-15
Equity Value
(in Mn)
Premium/
Discount
Industry Estimates 20% 544 1,462%
Analyst Estimates 35% 2,270 274%
Microsoft‟s Estimates 40% 3,174 168%
Actual 55% 7,438 14%
23. Post-Acquisition Results
Currently, the acquisition has bore positive results –
Skype has been integrated with Microsoft Lync and integration efforts are continuing
Skype has reported strong revenue growth (CAGR) of 55% in the past two years
25. Facebook
The Clear Winner
Microsoft had purchased 1.6% stake in Facebook for $240 million in 2007
On its own, Facebook had no or very low chance of purchasing Skype
However as Microsoft is an investor in Facebook, the latter would get access
to Skype‟s assets
At the same time, Google would not have access to Skype
Thus, even though Microsoft finally purchased Skype, Facebook came out
as a clear winner
Why Microsoft gave this access to Facebook? – The Microsoft-Skype-
Facebook trio make a worthy competitor to Google
26. Developments in 2013
Cisco challenged European Commission‟s approval of Microsoft‟s acquisition of
Skype
The arguments are that the acquisition creates an unfair monopoly and that
there could be serious harm to consumers:
Around one-third of world‟s voice communication is via Skype
Microsoft would control 80-90% of the market for video calls on Windows-based
computers
Microsoft was required to make no concessions in its purchase
The counter argument given by EC is:
There is no evidence of competitive harm
Other emerging technologies can succeed making Skype obsolete
Cisco‟s main demand is inter-operability – the capability of any device to
connect to any content that allows Internet to grow
If Cisco wins this case, then Microsoft may have to annul its acquisition of Skype