What’s Behind Microsoft’s $8.5 Billion Takeover of Skype?

Rumors that Facebook or Cisco would buy Skype were proven wrong on Tuesday when Microsoft struck an $8.5 billion deal to acquire the online voice and video chat service. Most analysts welcomed the takeover as a shrewd move on the grounds that it positions Microsoft in a commanding position in the emerging markets of video content and online telephony. Still considering that Skype’s previous acquisition by eBay ended in a $1.4 billion write-down questions remain. Will there be a good cultural fit between Microsoft and Skype? Did Microsoft overpay for a company that continues to lose money? Knowledge at Wharton discussed these questions and more with Wharton professors Eric Clemons and Kevin Werbach.

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