caseism

MICROSOFTS ACQUISITION OF SKYPE Case Solution & Answer

May 10, 2011, Microsoft announced that it would buy Skype for $ 8.5 billion. The price was definitely great – about ten times the income of Skype in 2010 ($ 860 million), approximately twice its recent evaluation. In late 2009, eBay sold most of its stake in Skype to an investor group led by Silver Lake Partners assessment of approximately $ 2.75 billion. What makes this more interesting is that Skype itself would not have been profitable since its founding in 2003. So what was the reasoning behind this case? How Microsoft finally arrive at this price? Why was willing to pay a sum of money? Is there anything else? Branding, networks, technology, products and strategic synergies possible …? Learning Objectives: The case provides a good opportunity to discuss issues of evaluation in a growing company in the high tech industry. The acquisition was undoubtedly expensive. But how Microsoft gets to this price? Back to the point of evaluation. What was the value of Skype at the moment? Although a private company, Skype was ready to go public in 2010 and, therefore, you have inside information on its financial performance. On the basis of these documents, as well as analyst reports, participants can learn how to justify valuing a company using discounted cash flows. Microsoft and Skype are large companies operating in the technology sector. The case is also a good opportunity to discuss the characteristics of the industry in general and the strategic / synergistic fit for both companies.
by
Salvatore Cantale,
Shan jialu
Source: IMD
16 pages.
Date Posted: April 30, 2013. Prod #: IMD574-PDF-ENG
PURCHASE OF MICROSOFT case SKYPE Solution

Share This

LOOK FOR A FREE CASE STUDY SOLUTION

JUST REGISTER NOW AND GET 50% OFF ON EACH CASE STUDY