Was it a Justified Price

CEO Steve Ballmer and Marc Andreessen
Source: cnn.com

This week it was confirmed that Microsoft is purchasing Skype for 8.5 billion US dollars. The hefty price tag makes it Microsoft's most expensive acquisition to date. The final price has been viewed as extremely steep for a software company such as Skype, which has never reported a profit, and the purchase is being put into question by investors. Many do not know what Microsoft will use the acquisition for and what their final goal is with this takeover. Interestingly, it has emerged that it was Bill Gates pushing the board of Microsoft to acquire Skype and he has said that it is important to incorporate video services in the future as it will become increasingly vital.

For an interesting article on this topic, I recommend you can go to the Bloomberg homepage.

My view on the final purchasing price is that it seems inflated for something that Microsoft itself could most likely have programmed.  It would be fair to say that what Microsoft is in actuality paying for is Skype’s massive user-base and reputation. It remains to be seen if this price will prove to be justified, or if it is actually an overinflated price that they are paying.