Microsoft to buy Skype for $7 billion

Microsoft is in talks to pay more than $7 billion to buy the popular Internet-based phone service Skype, The Wall Street Journal reported Monday.The Journal cited unnamed sources in saying the negotiations were wrapping up Monday evening and that the two companies were “close to a deal” which could be announced as early as Tuesday, but that it might still fall apart.Luxembourg-based Skype Technologies has 830 employees, including 110 at its Palo Alto office, to which it moved from San Jose and Brisbane last year. Company officials said recently that they plan to hire up to 400 workers around the globe this year — about 80 percent of whom would work in their 90,000-square-foot Palo Alto office.Skype officials declined to comment on the report.San Jose-based eBay (EBAY) snatched up most of Skype for $3.1 billion in 2005, two years after the service debuted, but ended up losing money in the deal. The online auction site sold most of its share of the company for about $2 billion to an investor group led by Menlo Park venture capital firm Silver Lake Partners in September 2009.

In addition to Silver Lake and eBay, the current owners include Joltid Limited, Skype founders Niklas Zennström and Janus Friis, the Canada Pension Plan Investment Board, and Andreessen Horowitz,a firm headed by Netscape co-founder Marc Andreessen.Skype’s brand name on the Internet could be the biggest value for Microsoft, which still makes most of its money from software.Skype users made 95 billion minutes of voice and video calls in the first half of 2010. About 40 percent of them were video calls. In the second quarter of last year, Skype connected 124 million users per month.Skype earned $13 million on $406 million in sales in the first six months of last year. More than 90 percent of the revenue came from charging users to make calls from its software to mobile and landline phones, although the vast majority of users do not pay to use the service.The Journal said it would be one of the biggest acquisitions in the software giant’s 36-year history. Microsoft previously declined a potential deal to buy Yahoo (YHOO). – Mercurynews