Microsoft buys Skype…

So the rumors were all true, Skype was looking for a buyer and Microsoft outbid Google. Outbid is an understatement, as Google it seems only wanted to pay $4B for the company, and Steve Balmer went crazy as per usual and added on an extra $4.5B for a whopping $8.5 BILLION FREIKING DOLLARS! Insane I know…

Technologically speaking, Microsoft acquiring Skype makes perfect sense, they can tie it into all of their products including the entire office suite, Bing, and can bake it right into the Windows 7 mobile OS.

From a financial standpoint however, it’s pure insanity, and my bet is that it will have dire consequences on their bottom line both in stock price and their overall annual revenue stream. Skype hasn’t made a profit, ever. Last year it made over $800 million in revenue, but revenue doesn’t mean squat, so what did they make in profit? -$7 million, yep negative profit.  Granted Amazon.com didn’t make money for years, and now they’re making a lot, but I think this is a completely different scenerio.

Microsoft did need to create another online revenue stream, as all they have is Bing. Sure they also have the Xbox network, Office 365, and a slew of other online offerings, but they all make very low amounts of profit or lose money. Many of the pundits will say that Microsoft is just investing in these(not loosing money), and in the long term they will come out on top. I disagree, with all of the competition out there on all fronts I feel that Microsoft is a dying company stuck in the past, and once their large stockpile of cash start running out they will finally realize that Steve Balmer has no clue what he’s doing and the stockholder will abandon ship.