Tuesday, May 10, 2011

Skype? Steve Ballmer Discovers a Way to Obliterate Eight and a Half Billion Microsoft Shareholder Dollars!

That's $8,500,000,000USD for the Skype brand.

Microsoft to Acquire Skype Combined companies will benefit consumers, businesses and increase market opportunity.

Also, because, you know, the aQuantive acquisition didn't destroy enough shareholder money.

We're bringing Skype to the Windows Phone. Just like how it's on the iPhone and Android and appears it will continue to be.

Okay, so we're bringing Skype to the Xbox. Because, you know, we don't already have video chat on the Xbox. Oh, wait... crap. Why do we need this? Other than the brand and the user base, and that's not worth 8.5 billion dollars.

Some early stories:

What I'd like to hear is each Microsoft board member share their reasoning why this is an excellent idea and worth 8.5 billion dollars. And I'd keep a really, really close eye on their nose.

Geez.


-- Comments

573 comments:

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Anonymous said...

At least they should charge tickets to the magic show : "Watch the incrrrredible Steve Ballmeeeeeeeerrrr vaporize 8.5 billion dollars into thin air"

Angela said...

Funny. Stupid. It was stupid when eBay acquired Skype and hyped it to the moon. It is stupid now. I don't know anybody personally who uses the program, although I know a number of people who tried and abandoned it.

Cecil said...

It really makes no sense, other than to keep it away from Google or Facebook. But even then, Windows Live Messenger has a larger active user base and better brand recognition. I don't get it. I really don't.

If it's to integrate Skype into Microsoft's existing products and services (Windows Phone with Skype audio and video chat integrated into the People Hub seems like a great idea), why couldn't they just partner?

I am flabbergasted at some of Ballmer's decisions. I'm surprised the stock hasn't tanked on this news. Either way I am glad I don't own MSFT anymore.

Anonymous said...

Microsoft has been late to the game on almost everything lately. Maybe they are looking to create low-cost devices that you can always virtually talk face-to-face on.

Think about it, we've been presented an epidemic of people getting killed while text messaging on their phones - we'll create an epidemic of people being killed by virtual backseat drivers!

Anonymous said...

We don't have a good track record for acquisitions lately. We bought Danger, and did nothing with it. We tried to buy an increasingly irrelevant Yahoo! "for its engineering talent" right before the economic meltdown, which in retrospect was a pretty crappy idea.

WP7 on Nokia, Bing on Blackberry, I hate to say it, but the Mac and Google fanboys are right when they call these partnerships of losers.

And now this? I can't see any reason for this other than to prevent someone in the Valley from acquiring it first. That's a pretty big price tag just to piss off the San Francisco bay. The existing user base of Skype will probably not be pleased by whatever comes out of this. We'll probably re-brand it as Microsoft(R) Windows(TM) Live Messenger Skype and ditch all the non-Windows clients.

When the economy double dips and they start laying off again, will this look like a good idea?

Anonymous said...

Given Microsoft's track record with its acquisitions I wouldn't want to be a Skype employee right now. Guys, ask the Danger folks, how (not) fun the ride down was.

Not to mention that there's a chance they'll be integrated into the WIn Mobile group. That'd be like reporting for your first day at a new school and being sent straight to the special ed room.

Anonymous said...

Skype is a good service used by millions of people. It has solid revenue and profit too, $100s of millions/year. I assume revenue will go down as more and more people use computers to talk to each other (free) vs. regular phones, though. And even if Skype made $0.5B profit/year that is still 17 years to break even on this investment. I don't know what Microsoft thinks it can do to help Skype or vice versa. The only thing that crossed my mind is that Microsoft could display ads for its own products to a hundred million people for minutes or hours at a time as they talk via Skype. Probably more effective than every time MS does an ad blitz for $500M that fizzles out after a few days.

Anonymous said...

This is so incredibly stupid. I really wonder why I still work here

Fichas Riyadas said...

@Angela: nice cherry-picking logic there. Just because you know no one using Skype doesn't mean everyone knows no one using Skype. Your implied Q.E.D. "no one uses Skype" doesn't stand. A number of sources report Skype is used for ~13% of international calls and has over 600million customers.

And I use Skype. So +1.

Anonymous said...

Ballmer's a smooth operator.He knows that all he has to do is make some big grand announcement every 6 months to pacify shareholders and Wall Street in order to save his job.

Stall
Stall
Stall
Stall
Stall
Stall
Stall
Stall

Anonymous said...

Glad I'm not alone.

$8.5B for Skype? That could have been a $89K bonus for every Microsoft employee. $8.5B? Google offered $4B. The investment firm that bought them got them for $2B. Skype is out there already. It's not a disruptive innovation. Oprah's show where it gets a lot of advertising is going off the air. Why would Ballmer think this is a good idea? Why? Oh, I forgot. He's stupid.

Someday, hopefully in my lifetime, the same political uprisings that just happened in the middle east will migrate to corporations, and the employees and shareholders won't sit still anymore. They'll drag the likes of Ballmer literally to the streets to get rid of him. Because he's not going to leave any other way!

Anonymous said...

Microsoft snubs banks for $8.5 billion Skype takeover

Looks like Microsoft didn't use any advisers for the deal just to save a measly $20m. I wonder if it will end up biting them back with all the previous rights and patents issues that Skype had?

Anonymous said...

@Fichas, that said - they still don't turn a profit and have less chance with Microsoft. Lots of people use MSN too, and I don't know any of them. Take a look at how it has contributed to Microsoft's bottom-line.

Anonymous said...

I am not sure how it is in the US but here in Europe nobody uses Live messenger voice chat. It is all about Skype over here. Skype is a very popular medium in almost all european countries.

Just make sure you keep things in perspective and do not put out of personal observations.

Anonymous said...

I used to use Skype. Found it really useful when I was in a foreign country and had an urgent need to call a 1-800 number here.

However, have since stopped using it and am now using Google Voice.

I haven't used Live Messenger ever since I started getting spam requests every day! Could never find a way to turn off those spam requests, so just gave up on it.

Anonymous said...

If it wasn't clear to investors and the rest of the world yet, it is now: Microsoft is in its death throes. We're so desperate to try and save ourselves that we're willing to throw away thing kind of money. So sad.

Anonymous said...

So now we have Lync, Live Messenger, and Skype... if this is not redundency, I don't know what is. I am not familiar with Lync, but at least I know Messenger and Skype doesn't really make a lot of money (great user base though) - but there are great user base overlap on Messenger & Skype (e.g. I have both?!).

I am not sure how these teams are suppose to fight it out now...

Anonymous said...

"Goldman Sachs Group Inc. and J.P.Morgan Chase & Co. advised Skype on the deal, according to people familiar with the matter. Microsoft is not using any financial advisers for the deal, the people added."

Clearly. How can Ballmer and the board justify foregoing an outside opinion, especially given the cost of this deal and MS's exceedingly poor record of integrating outside companies? Due diligence alone should have made that mandatory. Could it be that they knew the deal isn't financially viable under any reasonable time frame and didn't want a written record of that advice before doing the deal anyway?

MS could have bought Skype 3-4 years ago for under $4 billion, or earlier still when everyone thought Ebay overpaid at $2.7. Now it’s going to pay double for a company that is still losing money? Let’s be super generous and assume MS can immediately cut some of the operating costs even as it ramps up the R&D investment. So maybe Skype can make $50M instead of losing $7M. That's extremely optimistic and even then yields a payback time frame of 160 years, not counting massive integration costs. Insane.

MS will kill Skype within two years and most of the key people will jump ship within one. This is Danger or aQuantive all over again. Same bs about how tranformative it will be, just trust us.

It's also a clear admission that Ballmer has allowed MS to fall so far behind Google and Apple that desperate measures like this are required to have any hope of staying relevant. When are shareholders going to wake up and figure out that the real cost of Ballmer isn't his relatively modest salary but the hundreds of billions that he's erased from the stock and the hundreds more that's he's blown on abject stupidity like this?

Anonymous said...

I hope MSFT atleast got Skype's negotiators so they can negotiate better deals, like buying Apple and Google for a billion!

Anonymous said...

I think this acquisition could be a good thing. Sure it's expensive, but this could be our Facetime competitor but open to everyone on any platform. If integrated well, this could help us starting winning back share on the Microsoft platform(s)

Anonymous said...

why 8.5 billion dollars for skype?

just to feel better for keeping it away from facebook n google. this doesn't look a business deal to me.

Liz said...

8.5 billion...not a bad sum for the creators of skype, wow. I like that it will soon be integrated with xbox live, that'd be nice. I wonder though, any indication that the monthly price of skype may go up at all?

Anonymous said...

Time for Skype employees to start working out who's going to be at the bottom of the curve. Take a deep breath of that toxic corporate culture.

Anonymous said...


"It doesn't make sense at all as a financial investment," said Andrew Bartels, an analyst at Forrester Research. "There's no way Microsoft is going to generate enough revenue and profit from Skype to compensate."


Another money-losing acquisition?

Anonymous said...

"I think this acquisition could be a good thing. Sure it's expensive, but this could be our Facetime competitor but open to everyone on any platform."

Funny how Apple consistently manages to make small investments that result in billions of new revenue and profit while forcing MS to spend and lose billions in a vain attempt to respond.

Greg Glockner said...

eBay couldn't get ROI from Skype, even when they had no competing live chat technology. So how can Microsoft get ROI from Skype when Microsoft already has a number of live chat technologies?

Anonymous said...

You can currently save money by using a WiFi connection to make calls over Skype when available or if your cell reception is bad.

There isn't any need to buy the company to do that though. Skype currently runs on iPhone and Android.

Alcatel-Lucent's lightRadio (the size of a small cube that fits in your hand) reduces the costs of adding more cell towers. So, it will be easier for AT&T and others to upgrade their networks.

No one on the Board of Directors apparently cares enough to hire someone figure out if this acquisition makes sense.

Anonymous said...

How do MS make money on an investment of 8.5B$?

Where is the return going to come from?

What does "integration" actually mean in real terms? How would integration improve what Skype has already offered and hasn't been able to make money at?

Are we going to see Office tech support window bounce up and down instead of the effing paper clip? Who actually wants to see the ineffectual disinterested windows tech support in a window?

I can't see anything coming from this other than a pile of ashes.

Anonymous said...

"It has solid revenue and profit too"

It has no profit. It has been a money loser for its entire history. There is no way this deal can be justified financially. Zero. Nada. Zilch. In fact it's probably the most expensive deal in MS's entire sorry M&A history. And that's a mouthful right there.

Anonymous said...

Well you have to admit, it's a much more efficient way of losing $8 billion than say Xbox or Search was. Those took a decade. This one is immediate. Go Ballmer! Apple and Google shareholders thank you, as always.

Anonymous said...

read somewhere in WSJ comments section that this is more of the financial jugglery.

"MS is using cash stuck in a foreign subsidiary that is earning almost nothing today. They replace the cash in two quarters".

With Ballmer justifying the deal with the following statement instead of a technology vision - “We’re buying a company with EBITDA over $250 million" also suggests this is a pure financial deal.

If some technological value comes out of it, thats a bonus...

Anonymous said...

I can't wait until they start transitioning Skype away from all their non-Windows technologies which actually work, so they can "dogfood" it to remain a doctrinally-pure Microsoft subsidiary.

This story on the earlier potential purchase of Yahoo certainly seems relevant to the technological challenges facing the Skype acquisition, particularly in light of past examples:

Skeptics of Microsoft’s ability to eventually digest Yahoo’s infrastructure point to the initial embarrassing failure that occurred when Microsoft tried to absorb the Hotmail electronic mail service it acquired in 1997.

At the time the service ran on the open-source FreeBSD and Sun Solaris versions of the Unix operating system. Microsoft tried to move the service to its Windows NT operating system, but that was unsuccessful.

Later it was able to move it to a more advanced version of its Windows Server software, but was still chagrined when open-source advocates found that FreeBSD was still being used for portions of the service that required performance and stability. Microsoft acknowledged that Hotmail’s transition took 3 ½ years, but some analysts say they think it took even longer.


And we already have Danger/Sidekick to illustrate the worst-case scenario if technology integration doesn't go well...

Anonymous said...

How many groups inside Microsoft produce products that overlap Skype's capabilities in some form? How many internal groups handle partnering relationships with Telecom vendors?

You can be sure that politicians running the groups that overlap Skype's capabilities are going to protect their turf at all costs. Your Telecom 'partners' are about to find out what 'partnering' with Microsoft really means.

This couldn't happen to a more deserving company than Microsoft.

Anonymous said...

Microsoft's Biggest Acquisitions And What Happened To Them

Shameful.

Skype Server Enterprise Edition said...

Soon to announce - Windows Live Skype for consumers, with the adverts you know from messenger.

Microsoft Skype Server Enterprise user CAL, standard user cal and plus cal. Skype Server external connector standard, enterprise and plus editions.

Doesn't sound like a winner to me. Is Steve shorting the company?

Anonymous said...

Is there way this foolishness can be stopped, before the deal is over... can shareholders do anything about this..?

Anonymous said...

“We’re buying a company with EBITDA over $250 million" also suggests this is a pure financial deal.

I may not be a math whiz like Ballmer, but last time I checked you need earnings *after* ITDA in order to recover your purchase price. And of course Skype has none of that. Hence the reason Ballmer quotes EBITDA instead of net income. But even if the full $250 of EBITDA could be realized, which it never can be, you're still looking at 34 years to get your money back.

In other words, another epic fail for Ballmer. Maybe his failure magnum opus.

Anonymous said...

What if, by putting Skype on phones, we can bypass the RBOCs and capture a larger share of the mobile market - those without a voice/data plan?

Anonymous said...

A lot of the comments seem to have the old "Not invented here" mentality I recall from my Microsoft days. No one who doesn't work for Microsoft or have a family member who works for Microsoft uses Windows Live Anything.

Skype is a halfway decent product and the acquisition would make sense for Microsoft. However, Microsoft paid about 10 times too much for it.

That's because you are sitting on a pile of cash, but you have become largely irrelevant and you are grasping at straws. It happens to all formerly great companies sooner or later.

Anonymous said...

8.5B + 750M debt according to p117 of
http://www.sec.gov/Archives/edgar/data/1498209/000119312511056174/ds1a.htm plus another 250M in various obligations. So assuming MSFT pick up the debt/obligation tabs.

Skype's ~1000 employees could get 8.5M each (remember the company is based in socialist europe). http://techcrunch.com/2011/03/07/skype-revenue-up-20-percent-to-860m-in-2010-paid-users-up-19-percent/

Want to be a Skype employee? You'd better learn unix/linux if you want to work on their servers, see http://jobs.skype.com.

Watching the integration of tech and culture is going to be fun, for out competitors...

Anonymous said...

I have a question. Does the $8.5 billion we lose from this, and the eight more we'll lose over the next few years until it's run into the ground and quietly retired, count towards existing billions lost in mobile, search, or Xbox? Or did we create a new division just so SAI couldn't publish any more of those embarrassingly accurate charts showing years of red bars associated with these efforts?

And can we assume from the board approving this that Ballmer isn’t going anywhere despite losing the tablet and mobile markets?

Steve Ballamer said...

I'm retarded. It's my money and I can do whatever I want with it.

Anonymous said...

Mini, does this finally convince you that Microsoft hasn't turned the corner, but rather finally gasped it's last?

We're no longer dying, we're dead. This deal proves it. Ballmer isn't even a joke any more, he's not interesting enough to waste joke time on.

After 15 years, this was the news that finally made me contact my recruiter friends this morning. I'm done.

Anonymous said...

@Cecil said "But even then, Windows Live Messenger has a larger active user base and better brand recognition. I don't get it. I really don't."

But maybe that's the key? After all, getting Skype into the hands of the half-billion (or whatever the too-big-to-imagine numbers are) users, getting them paying subscription fees for cheap phone calls to anyone they can make as easily as they IM them for free today? Lync is great technology, but it is better behind a firewall for calling than it is cross-firewall. I could see huge synergies where companies could use the Lync back-end behind the firewall while using Skype in front, and hooking the consumer market up for the ride. Not only that, but the subscription services MS does monetize, such as XBox Live, only reach about 25m users. How many more users would sign up for an XBox Live subscription if it included unlimited Skype voice as well? It's a big number, whatever it is....

I totally agree it made no sense for eBay (I never even understood how it related to eBay's core business), but for MS it can drive revenue in an area where significant investment (and competition) exist but for which the ROI is pretty weak.

Obviously I can't speak for the board and why they made this choice, or if my vision is one shared by Ballmer and upper management, but I don't see this as really far-fetched a proposition and it could potentially be far more lucrative than most of the acquisitions MS makes.

Anonymous said...

"MS is using cash stuck in a foreign subsidiary that is earning almost nothing today"

And now it will be cut in half or wiped out completely. Capital preservation with modest appreciation is preferable to incineration.

The issue isn't could the funds have been allocated better. They clearly could be. The issue is why this particular deal that isn't even accretive?

Even if you make a lot of assumptions about cost efficiencies and possible licensing opportunities (e.g. FB or Nokia), it's still very hard to construct a scenario where Skype returns the outlay and contributes in a meaningful way to MS's overall.

Keep in mind this is a company whose stock has been dead for a decade and who has resisted numerous analysts and investor requests to drastically increase the dividend. This one deal is more than the cost of doubling the dividend for a decade, and with no clear return. Investors should be furious.

Anonymous said...

"Obviously I can't speak for the board and why they made this choice"

They made this choice because Steve told them to and Bill didn't say no. MS's board is an embarassment.

Anonymous said...

"I'm retarded. It's my money and I can do whatever I want with it."

Shareholder's actually. But Steve doesn't appear to recognize that and apparently nobody has the balls to remind him.

Anonymous said...

"Is there way this foolishness can be stopped, before the deal is over... can shareholders do anything about this..?"

Only if regulators shoot it down, which isn't likely. Otherwise I assume the terms are set and signed. So even if shareholders finally got off their ass and canned Ballmer, the company would still be committed to the deal.

Anonymous said...

Skype and Microsoft: Your Cheat Sheet to the Good, Bad and Ugly

Anonymous said...

You'd better learn unix/linux if you want to work on their servers, see http://jobs.skype.com.

If Hotmail was any indication, Microsoft will force Skype to move everything to Windows Servers and that will just screw everything up!

Anonymous said...

How long before we decide Skype's working Linux infrastructure must all be replaced by Windows or Azure and bork it up like we did Danger?

Anonymous said...

Prediction:

Before the integration is even complete, Skype's market share gains will have reversed direction with Google and Apple being the beneficiaries.

Anonymous said...

Skype last year's revenue: 860M
Skype last year's net income: -7M
Ballmer just paid 8.5B for Skype. Assuming another 1.5B in opex for 5 years it means MS needs to turn Skype into a 2B/year business for the next 5 years for this acquisition to make sense.
On the bright side, no one better equipped than our excellent CEO to turn a -7M/year business into a 2B/year business. You only have to see how successful he has been with search, hotmail, messenger etc etc....

Kevin said...

"Funny how Apple consistently manages to make small investments that result in billions of new revenue and profit while forcing MS to spend and lose billions in a vain attempt to respond."

Yes, I was thinking the same thing.

Anonymous said...

Ballmer conned into bidding several times what Skype was worth and now saddled with another white elephant.

Well played Larry Page. Well played.

Anonymous said...

"On the bright side, no one better equipped than our excellent CEO to turn a -7M/year business into a -2B/year business."

Fixed it for you.

Anonymous said...

Hopefully they can add the functionality to Lync so it will actually work well. How many meetings have been over the phone lately due to Lync issues.

Anonymous said...

Skype's ~1000 employees could get 8.5M each (remember the company is based in socialist europe).

"socialist Europe" sounds like a better deal for them than U.S. capitalists exporting jobs to communist China and then borrowing the money back so even more money leaves the country.

Anonymous said...

And yet another piece of the puzzle on why Ballmer knew the stock was toast and employee compensation needed to be changed to favor cash.

Anonymous said...

"Ballmer just paid 8.5B for Skype. Assuming another 1.5B in opex for 5 years it means MS needs to turn Skype into a 2B/year business for the next 5 years for this acquisition to make sense."

$2B in revenue does nothing to return the payment if losses continue. And even if it can suddenly make $50 or $100 million profit/year from losing $7, it still makes no sense. That's multiple decades to pay for itself.

The stock impact is even worse. At MS's current 10x PE, even $100 million divided by 8+ billion shares x 10 is a rounding error.

Anonymous said...

Note to Steve Ballmer: This is 8.5 billion more reasons why you should head for the exits. There's only one word to describe your stewardship of Microsoft: Pathetic!

Anonymous said...

You know for a lot less money Ballmer could have reassembled the Response Point team

FARfetched said...

I wonder how long it will be until the Mac / iOS / Android clients are all but useless, missing crucial features, lagging in updates, etc.

Anonymous said...

"Today's announcement underscores who we are as a company," Ballmer said in an e-mail to employees.

Yeah, dying, desperate, and run by a moron.

Anonymous said...

KIM CAUGHEY FORREST, SENIOR ANALYST, FORT PITT CAPITAL

“I can’t wait to hear the logic behind this.”

“They really have to do some explaining on the call as to how this company merited that price and how they’ll return the value to shareholders.


“They (Skype) have a lot of customers but it doesn’t seem like they get enough money from those customers.

“This is less than two quarters of their cash flow to buy the company. They’ll be able to pay for it very quickly.”

On integration into Xbox Live:

“Xbox Live seemed to be doing pretty good without that.

“It’s more interesting they’re thinking of incorporating it into Outlook.

“Software companies think consumers want this but the question is will they pay for it,” she said referring to friends who have 18-hour Skype sessions with each other without paying a penny to Skype.

On wireless carriers:

“It could help them if it’s integrated (into cellphones)” as it could be easier than the Apple iPhone app.

“This would drive a lot of data and a lot of bandwidth. it would be carrier neutral.

“It smacks of that 1999, 2000 time period when valuations were granted on eyeballs not revenue and earnings.

“There’s been a lot of talk as to whether Microsoft should be broken up and stop investing in money losing nascent businesses, stop trying to chase the hot areas and become a slower growing higher cash yielding business.”

Anonymous said...

"But the deal prompted near universal agreement from analysts in one key regard: For better or worse, it seems likely to shape how Microsoft manages the unfolding developments reshaping the Internet; whether it will go down as a fading power that never managed to adapt, or instead uses Skype to propel itself back into the conversation."

That's easy: the former.

"The deal reminds me of the eBay purchase of Skype about six years ago," said Wang. "You draw a nice picture, you hope it will turn into reality, but maybe it'll turn out Microsoft has made another dumb move with this acquisition."

Correct.

Anonymous said...

Hmm, $8.5 billion and there are 8.4 billion shares outstanding. I'd rather have an additional $1/share dividend.

What a cluster. He could have spent the 8 billion on a slew of SW engineers to go straighten out Lync and Messenger and gotten further.

Everett said...
This comment has been removed by the author.
Anonymous said...

New math: $8.5B + $3B = $11.5M

Anonymous said...

Well let’s see. This:

- Adds more debt to our balance sheet
- Detracts from profitability
- Further reduces average margin
- Overlaps existing products
- Gives us another non-contributing division when we’re still losing billions per year and having serious problems (i.e. RPS) with the Yahoo integration
- Doesn’t provide any immediate advantage for the two most serious threats we face: our nearly dead mobile effort and completely dead tablet one
- Gives Ballmer one more thing to divide his limited skill set over when he can’t handle what he has already
- Comes at the cost of not putting that $8.5 into things that didn’t have these attributes or providing a much needed dividend doubling to incent anyone to buy our long dead stock

What’s not to love?

Anonymous said...

I just keep coming back to "why". We have such a bad record on acquisitions. Why.

Anonymous said...

More than $9 billion spent on R&D annually and we have to pay $8.5 to buy a VOIP solution? Srsly?

Yeah, this gives us a huge competitive advantage. There are only about two dozen free alternatives.

Marco Cantu said...

I use and like and pay for Skype, but now I'm wondering. I'm paying for a number (Skype in) and to call abroad.

I'm also curious about the fact Skype for Windows is written in Delphi (non in Visual Studio) and about the fact it cannot be distributed from the US as it uses strong encryption, AFAIK.

Odd, very odd.

Anonymous said...

"I just keep coming back to "why". We have such a bad record on acquisitions. Why."

1) Ballmer
2) Weak M&A targeting and implementation process
3) Too much cash coming in from elsewhere (meaning M&A failure can be an option when it shouldn't be)
4) NIH culture that shuns outsiders
5) Omnipotent groups (Windows, Office) that can kill new initiatives.
6) Focus on preserving the past instead of owning the future (see #5)
7) No board enforced accountability
8) No shareholder enforced accountability

Anonymous said...

Did Microsoft overpay for Skype? Hell yes — by $4.5 billion

"According to a source who claims knowledge of talks held between all parties, Google came in second at a price of $4B, while Microsoft will be paying $8.5B. This suggests that Redmond is paying significantly over the odds for Skype, although only time will tell if it turns out to be a smart deal. What is known is that had Microsoft been aware of the price that Google was willing to pay it almost certainly would have come in lower."

"In fact, GigaOm’s Om Malik goes even further, suggesting that Google wasn’t that serious either. “I also don’t believe that Facebook and Google were serious buyers”, he says, citing the existence of Google Voice. “In essence, I feel that Microsoft was bidding against itself.”

Anonymous said...

"Let me see if I understand this:

Microsoft buys Skype for $8.5-billion. Skype was barely profitable last year; mostly break even at $7-million. Microsoft can absorb future Skype investment losses (they've been doing that for 20 years). Microsoft can absorb a flat-lined stock price (they've been doing that for 10 years). Microsoft can absorb scathing criticism of yet another crazy purchase gone wrong (they've been doing that for 30 years). The best non-Windows, non-Office profitable revenue stream Microsoft has is the Microsoft Mouse. The best deal Microsoft was ever involved in was the deal with Yahoo! that fell through. Instead of wasting $48-billion on Yahoo!, Microsoft merely gives them money every quarter so Yahoo! stays profitable. That's considered a good deal at Microsoft.Frankly, it's no wonder I don't have an MBA. I can't do the math."

Anonymous said...

This is reminding me of the Danger acquisition.

I seriously wonder if Ballmer/the BOD are understanding why existing Skype users like it, and think they can make that experience better, or if the plan is to re-mold Skype into something that Microsoft wants to try. Think Hiptop/Kin.

I can only fall back on my instincts, but my gut has a very bad feeling about this.

Anonymous said...

"What I'd like to hear is each Microsoft board member share their reasoning why this is an excellent idea and worth 8.5 billion dollars"

Ballmer: Look, it's less than I was going to blow buying Yahoo.

Gates: Did we approve that? I don't recall.

Dublon: Um, you have to run the numbers over a longer than normal horizon, like a century or so

Gilmartin: Fore! Oh sorry, what was the question again?

Hastings: Steve's blown more to get less.

Klawe: What's a Skype?

Marquardt: Ben Horiwitz and I go way back and if he says this is a can't miss buy for us then I believe him. Oh, was he the seller too?

Noski: I told Steve I had some derivatives he could buy for less, but he went with this deal instead.

Panke: Das ist gut, ja?

Anonymous said...

"I seriously wonder if Ballmer/the BOD are understanding why existing Skype users like it, and think they can make that experience better, or if the plan is to re-mold Skype into something that Microsoft wants to try. Think Hiptop/Kin."

Myabe this was all to give Roz Ho some reports again?

Anonymous said...

the fact it cannot be distributed from the US as it uses strong encryption

Well, say goodbye to the strong-encryption and hello to the CIA/FBI-backdoors. They could get away with it before as they were non-US. Now they have to open up the backdoors!

Anonymous said...

I know this is way off topic, though tangentially related, for that I apologize. Does anyone know, in regards to COBRA, when you leave can you take coverage for just your dependent/child and not yourself? Or in order to cover your child do you also have to cover yourself? (And if you know, how do you know?) Thanks!

Anonymous said...

You'd better learn unix/linux if you want to work on their servers, see http://jobs.skype.com.

If Hotmail was any indication, Microsoft will force Skype to move everything to Windows Servers and that will just screw everything up!


FAST was the same: Apache and MySQL. Logic was ported and updated for SharePoint 2010.

Anonymous said...

Steve Ballmer: the anti-Midas.

Anonymous said...

If Steve with the board's consent really paid twice the nearest offer for Skype, then he and they should be fired.

Even at $4 billion this deal would be iffy. But paying an extra $4.5 needlessly is unconscionable.

Anonymous said...

Well joker Bruce Jaffe did the expensive aQuantive $6 billion deal and got fired when the monkey boy realized he had been fooled (which is rather easy to do) and paid too much . Who do they fire now? Hanky Boy? Tami is too pretty, may be board wakes up this time and fires monkey boy and all the Vice Peons who did this deal. It's a utter joke - everyone (including competitors) except MSFT is a winner! See: http://www.msnbc.msn.com/id/42973771/ns/business-us_business/
"The Skype executives are probably already shopping for private islands and yachts."

Anonymous said...

Other uses for $8.5 billion:

Pay shareholders $1 of the $3 Steve has lost them on the stock just this year alone

Give every employee a bonus of more than $90K

Lose money in search for another two years

Provide at least 17 million people with a free WP7 phone

Anonymous said...

"may be board wakes up this time and fires monkey boy and all the Vice Peons who did this deal."

What part of the board approving this deal did you miss?

Anonymous said...

Why is Steve allowed to initiate more expensive deals when Danger and aQuantive have been failures that lost more than $7 billion, the Yahoo integration continues to cost billions and we both admit that the joint return is still below expectations, and Nokia is currently another multi billion dollar moon shot?

This is f'ng insanity. The price of a new deal should be a) demonstrated success on the previous one or b) one heck of a good reason.

joe_h said...

Never seen so many whiny fucks in one place in my life. None of you have a fucking clue whether this is a great purchase or not, and for every analyst that says it's not, I can find two that say it is. If I had a dime for every time an analyst was wrong, I'd be rich.

"This is so incredibly stupid. I really wonder why I still work here "

Then quit you whiny bastard. Microsoft doesn't worthless twats like you anyway.

You stupid idiots are going to whine like a bitch no matter what Microsoft does. So keep it up.

Anonymous said...

"What if, by putting Skype on phones, we can bypass the RBOCs and capture a larger share of the mobile market - those without a voice/data plan?"


Huh? The real cost of a phone is $600+. How are you going to subsidize it down to the $49-$199 range by bypassing the carriers? If not subsidized, then how are you going to convince consumers to pay $600 when they have been trained to pay the $49 for an AT&T iPhone?

Oh by the way, if you want to use the phone without a data plan, you need to be in a wi-fi hotspot. So if you are stuck in Death Valley, there is no way you can call for help.

Look, nobody likes the carriers, but somewhere, somehow the cost needs to be paid. Hoping Skype will somehow free Windows Mobile from carrier input is akin to hoping to win the lottery without buying a ticket.

Wait, I retract that. It is akin to hoping to win the Powerball lottery by buying 8.5 billion Mega Millions tickets.

Anonymous said...

I've read half a dozen articles about this today and they all same effectively the same thing: MS paid too much and lacks the execution necessary to make this a success.

The former is worry. But the real concern should be the latter.

Anonymous said...

"If I had a dime for every time an analyst was wrong, I'd be rich."

Especially if you'd sold MSFT every time they said buy. But analyst accuracy aside, what about Ballmer accuracy? How did his iPhone and iPad predictions turn out? Android? Catching up to Google in search within six months? What recession? The cloud was a fad? Zune was going to compete successfully against iPod? Vista would be great? Closer to the topic, how did aQuantive work out? Danger? The Yahoo partnership so far?

The difference between analysts and Ballmer is that analysts occasionally redeem themselves and get something right.

Anonymous said...

"None of you have a fucking clue whether this is a great purchase or not, and for every analyst that says it's not, I can find two that say it is."

Yes, we certainly do have a clue: we've watched a spectacular and non-stop array of Ballmer failures over the last 10 years.

Betting that this is going to be a disaster is playing the safest odds in town, buddy.

And stop talking like you live in the gutter, there's no call for that kind of language. Period.

Anonymous said...

Steve Ballmer makes John Scully look like a genius in comparison.

Anonymous said...

It's either pay Skype or pay the tax man. It's good for the competition though: it will get messed up so bad opening the doors for many others... Andryde? Oh, I forgot, Skype is a portal, an advertising medium

Anonymous said...

If you're toxic on the inside you'll poison the others... Most succesful takeovers: leave the company culture alone, but no, all these MBA's will jump on it, claim it, take it, eat it alive...

Anonymous said...

And some people blame the decade long decline in the stock price on the widely held perception that MS makes billions on one side only to turn around and fritter them away on the other.

Anonymous said...

The biz world moguls reward each other with 'deals'... patiently awaiting their next golden parachute or bonus, the shareholder pays the bill... nice gig...

Anonymous said...

Mini is starting to sound way too much like the jaded softies that vent here rather than digging in and making things better. Shame on you...

Great idea? Bad idea? Time will tell, but rather than point out things I don't understand, I prefer to try and understand why... there is always a bigger plan that maybe you were not part of.

Patents? Communication is truly converging in the IP space. It's all been done, so it more about the business now-- patents clear the way, user base is an easy buy.

8B is a lot of dough but we have to stay in the media business and it's about to get ugly folks.

Anonymous said...

Q) Who does MS want to fuck over today?
A) Skype & all non-Windows users of Skype.

Everything MS touches turns to shit.

Anonymous said...

Q) Who does MS want to fuck over today?
A) Skype & all non-Windows users of Skype.

Everything MS touches turns to shit.

Anonymous said...

Shocking. Nobody I talked to today inside or outside MS had a justification for 8.5 large. The caveat being that "there are a lot of smart people in Redmond who have thought this thing through". Maybe not.

One that crossed my mind for sure. Isn't the fact that we have to go pay these outrageous numbers (yahoo, acquantive, skype) the most damning commentary on Craig Mu and the huge amount of money we are pumping into ms research? Kinect was an acquisition. Time to call bs on that model.

Anonymous said...

Anything that increases the value of my steaming pile of MSFT is good, but I notice the stock is DOWN on the news today.

An interesting, if pessimistic commentary here:

http://www.guardian.co.uk/technology/blog/2011/may/10/microsoft-skype-steve-ballmer

Anonymous said...

When it comes to Microsoft wasting money, the Skype's the limit.

Anonymous said...

Well, personally I’m relieved that Steve put a whole month into this, starting from initial meetings about an advertising partnership to finally ending up with a purchase. I'd have worried if I thought he'd rushed into our largest acquisition ever without doing any homework.

Anonymous said...

@Angela: nice cherry-picking logic there. Just because you know no one using Skype doesn't mean everyone knows no one using Skype.

Microsoft acquired Danger. How many people do you know who now use Sidekick phones or Kin phones?

Anonymous said...

The funny thing is, just a week ago, I was thinking about buying MSFT stock a while back; thinking that with a 2.5% dividend yield, it was at least better than many other investments.

And then I thought to myself, what if MSFT's Windows or Office sales go through the floor --- or what if Ballmer did something completely idiotic with the cash pile that MSFT is sitting on top of? And so I didn't pull the trigger on buying MSFT stock deal. And mow, I'm so glad that I didn't!

Anonymous said...

I like that it will soon be integrated with xbox live, that'd be nice.

I can just hear the operator: "Thank you sir, I'm kinecting you now".

Anonymous said...

@joe_h

If I had a dime for every time an analyst was wrong, I'd be rich.

And if you had a dime for every time Microsoft had been wrong, you would be orders of magnitude richer.

Anyway, that's all just dreaming for you - you have to subsist on a shill's meager stipend.

Anonymous said...

Seems like the Street sees more upside than the pundits, or the people on this board. MSFT share price is almost what it was before the deal was announced, which is unusual for such a big acquisition. (Don't ask me why, I don't get it either).

Anonymous said...

Cecil said...
It really makes no sense, other than to keep it away from Google or Facebook. But even then, Windows Live Messenger has a larger active user base and better brand recognition. I don't get it. I really don't.


The problem isn't that you don't get it. The problem is you are trying to make sense of it. C'mon. It's Ballmer. What else you expect from that fat moron?

Anonymous said...

The mainstream news coverage today didn't know what to make of micoSkype. The consensus seemed to be broadly positive while acknowledging the deal was a brave gamble to stay relevant.

Overnight the consensus is shifting to Bubble 2.0 where microsoft overpaid by $4b, and now whispers that Larry Page (unlikely IMO – more likely skype suits) somehow outplayed or tricked steveB into a 100% over-valuation. Worse we did not obtain third party external financial advice on the acquisition so as to save several million in pocket-change. Those same financial institutions we cut out of the deal are now starting to crow how this is a monumental all-time epic over valuation. The FI do not appreciate being cut out of the loop and - partly out of spite - are dispatching their analysts to kick the decomposing corpse of steveB's reputation.

If the accepted narrative becomes Larry Page conned SteveB, and skype is really worth < 50% of the acquisition price - just one day after the announcement – surely steveB will have to go. It is just gross incompetence and too embarrassing for the company. Even if it isn't true and we have realistic plans to somehow leverage significant videocall profits over the next decade – then the widespread media perception of a foolish acquisition may still be enough to push the board to topple steveB – punishing him for a truly terrible decade of successively more wasteful acquisitions.

IMHO if the mainstream financial media mostly run stories mocking this deal over the next 24hrs – specifically criticising steveB for reckless schoolboy-error massive over-valuation (perhaps mentioning moby-dick and larry page) & stock hits 52wk low - then steveB will finally be toast; end of.

Anonymous said...

Someone commented about carrier negotiations...

We are pretty close to completing our own high speed dwdm network that cris-crosses the US and can carry terabits a second of traffic. Work on an EMEA network has also begun.

This acquisition makes sense if you want to become a next generation phone company using that infrastructure.

Anonymous said...

Remind me again why I am busting my ass working for Steve?

Why it matter if he ships a few more copies of Windows- he is apparently just going to piss it all away anyway?

Anonymous said...

My team blew up. Any idea what is the MS standard, good performer E70, L65 severance package? Can you please include limitations on re-hire? 14 years here and would like to know what are the scenarios. Thank you.

Anonymous said...

The company lost 7 million last year, was valued at 2.25 billion, the highest bid ever was around 4 billion.

... and Ballmer pays 8.5 billion- 3X what it sold for 18 months ago.

What's next.. maybe Goldman can sell him some communication derivatives?

Anonymous said...

"So what's the Skype acquisition about? Ignore the talk of synergy that Ballmer and Skype's new chief executive, ex-Ciscoer John Bates, will spout. It's about Ballmer's long-term aim to make Microsoft back into a hit brand with consumers, a position that it last held with the launch of Windows 95 in August 1995."

Exactly.

Anonymous said...

New FY11 review commitment for Steve: increase business savvy.

Someone needs to U/10 his ass.

Sham Wow.

Anonymous said...

Ballmer puts another $8.5 billion of coal into Titanic's boilers. Full steam ahead...

symbolset said...

OK, it's unanimous: this is a failcar on a long failtrain. Now I'm going to ask you to consider a modest proposal: What if it's deliberate? Consider the possibility that this is not some accident. I'll illustrate my point with a few choice quotes:

"Once is happenstance. Twice is coincidence. Three times is enemy action." - Ian Fleming

“When you have eliminated the impossible, whatever remains, however improbable, must be the truth.” - Sir Arthur Conan Doyle

What if the goal is to deliberately fail? Then what?

Anonymous said...

RIP Skype

Anonymous said...

"Even if it isn't true and we have realistic plans to somehow leverage significant videocall profits over the next decade – then the widespread media perception of a foolish acquisition may still be enough to push the board to topple steveB – punishing him for a truly terrible decade of successively more wasteful acquisitions."

The board approved it. They're now effectively joined at the hip with Steve on this. The only way he'll get toppled is if shareholders get pissed enough at this latest ridiculous waste of their money and fire him and the board, which is something they should have done at least five years ago.

Anonymous said...

"After paying $8.5bn for Skype, what will Microsoft end up with? In a few years, I forecast it will be this: $8.5bn less in its bank accounts, a cats-in-a-bag fight between its Office division and its Online Services division over integration of the service, little – if any – kudos from consumers, and no appreciable effect on its bottom line.

That's right: Steve Ballmer, Microsoft's chief executive, might as well have put the money on a bonfire for all it's going to do for the company's share price, which has barely shifted in his 11-year tenure. In fact at present, the share price reckons that Microsoft is less valuable as a single entity than if it were broken up."

Anonymous said...

MS bought Frontbridge almost 6 years ago and it's still running Linux.

Anonymous said...

Posting my 2 cents here since I really don't think anyone in executiveland @MS really gives a rip about what I have to say. As an employee that may be affected by this acquistion, I found it disconcerting to first hear about this on the 6 AM news rather than from our CEO. Oh wait -- he sent the mail at 5:30 AM. Doh! Seriously, it does not make me feel like a valued employee when the CEO is pandering to Wall St. and not engaging the employees in what the right direction is for the company. I heard the 8.5 billion figure, and I gasped. At least it's not as bad as if Yahoo went through, and that's me looking at this optimistically.

+1 on the post about what the board members would say. Sad thing is, I don't think it's that far off from reality.

Anonymous said...

It's Mark Andressen's revenge for killing Netscape!

(His VC firm is an investor in Skype)

Anonymous said...

this is to keep google and fb from acquiring them. defensive move.

Anonymous said...

This is the guy that almost pissed away 35+ billion on Yahoo. Which barely cleared 224 million in revenue last quarter.

Anonymous said...

A question, rather OT but in partial followup to Anonymous at Tuesday, May 10, 2011 10:10:00 PM:

If you resign voluntarily (rather than 'leave voluntarily because your other choice is to be fired'), I'm not sure there is a severance package. I've heard of a number of people simply leaving and going to do other things, then being re-hired years later at a higher salary, no restrictions. I've never heard of such people being given a monetary bonus as a goodbye gift.

If however you 'leave voluntarily because your other choice is to be fired' and are granted a severance package in exchange for a 'but you'll never work for Microsoft again, or any contractor with Microsoft' - how does MSFT enforce this? Do they have some kind of black list database, against which the names of all hires at their contracting companies are compared? How exactly do they legally enforce it? In Seattle, that's not quite "you'll never work in this town again" but it's awfully close.

Anonymous said...

.. hey now who the fuck checked in this folder called net meeting ? What's that all about? Don't tell me we already have one of these video chat thingy ma jigs.

Anonymous said...

who cares, who cares, who cares!The analysts, stockholders, customers ah and oh yes, the employees (they can only voice in this blog, thanks Mini!)..
In fact: I wouln't be surprised to see Bing Search on the Skype window. There are 10-20M people on Skype at any given time, it's a portal. Facebook got on there recently... Now Bing

Anonymous said...

Don't forget: Skype is on various Android phones

Haha imagine Bing on Skype on Android, great backdoor strategy!

Anonymous said...

You have to wonder what these people were thinking when they signed off on this. (My guess is that they weren't thinking very much at all).

I would be surprised if this acquisition doesn't lead to a very nasty case of "buyer's remorse". It is certainly going to be very interesting watching the fallout.

Anonymous said...

I hope, MS is going be a carrier of the future. The current ones are really slow on doing anything (look at updates for WP7 and Android. iOS is a different story). I think, they are building build a flat IP (WiFi/4G) network...

Anonymous said...

@joe_h,

[...] for every analyst that says it's not [a great purchase], I can find two that say it is. If I had a dime for every time an analyst was wrong, I'd be rich.

OK, let's break down your reasoning here. You claim that analysts are two-to-one in seeing the purchase in a positive light versus negative, but in the same breath you state that analysts are often wrong.

By that logic you are agreeing that this was a very foolish move on Microsoft's part. Is that really what you meant to convey?

Perhaps you're one of those awesome Microsoft rock-stars and the "h" in you name stands for "hot-shot". Maybe you aspire to the rarefied ranks of senior management; certainly your language clearly conveys that you are of a similar ilk to Steve "I'm going to f*ing kill Google" Ballmer".

Anonymous said...

It's telling that the "winners" in this deal as reported by the media are almost entirely comprised of "people who invested in Skype and who can now retire to the Bahamas without having to lift their digits for anything more than take-out food again."

Outside of that nobody else knows exactly why this deal went down.

Why can't this company be run by a man who's reasonable about his emotions and more in control of his impulses to save face? Can't we just give him his reality show on the Bravo channel and be done with it?

Anonymous said...

I don't understand why Microsoft employees and shareholders are so upset. After all, if this acquisition hadn't been made, the money might have been wasted on pay rises, employee health benefits, improved dividends and other such frivolities. Thank goodness you have Mr Ballmer's steady hand on the helm!

Anonymous said...

.. hey now who the fuck checked in this folder called net meeting ? What's that all about? Don't tell me we already have one of these video chat thingy ma jigs.

NetMeeting? Yeah, I think the last guys to touch it might have been those guys from PlaceWare, right around the time they were acquired to improve NetMeeting, before it turned into (was replaced by?) Office Live Meeting.

Skype is both point to point (Lync) AND multi-point conferencing, so sure, add Office Live Meeting into the list of MS products that might be protected from market share erosion by slowing Skype's pace of evolution.

The more I consider this, the more it's looking like a defensive move, both to keep the technology and user base away from rivals and to keep it from cannibalizing other existing products' revenues.

What if the online folks get Skype and its big gigantic cash vaccuum, while Office gets to keep its $$ from its products thanks to not having to worry about Skype improving (OSD will see to it that it does not). This is in keeping with the protection of the Office monopoly while not caring about the performance of OSD or whatever it's called this week.

And regarding acquisitions, Google, and Google Talk (did you mean Google Voice?), look up Grand Central. Not all build vs buy decisions Google makes end in "build".

Anonymous said...

As an IBMer, this acquisition makes me very happy. It puts MS at more of a competitive disadvantage, and makes me realize just how smart IBM's upper management is when they buy other companies. This is also the reason that IBM is worth $170/share and MSFT is worth $25. I like to think I picked the right company to work for after graduating college :)

Anonymous said...

Before everyone dismisses this read this: http://www.businessinsider.com/numbers-microsoft-skype-deal-2011-5?utm_source=Triggermail&utm_medium=email&utm_term=SAI%20Select&utm_campaign=SAI_Select_051111

Anonymous said...

In fact: I wouln't be surprised to see Bing Search on the Skype window. There are 10-20M people on Skype at any given time, it's a portal.

I've heard claims that Ballmer would pay almost anything for traffic acquisition to try to make Bing competitive (if completely unprofitable), but $8.5 Billion seems to be a little high even for him, don't you think?

Anonymous said...

I never get all these mergers and acquisitions. I've been following business news closely for around 12 years, and it seems like a very large fraction of all the major mergers have been a total disaster. It's always too expensive, there are major integration issues, the talent quits etc. etc. Also, it often seems there would have been much, much cheaper ways to obtain the technology, synergy, whatever that was the objective. It's not just in IT, but IT is the field I've been following the closest. In some cases it is not possible to tell if the acquisition was a success or not, because it basically went "silent" - you never saw something new coming out of it, just the two companies being bundled together. I can't name a single example where an acquisition was a clear success, where something was achieved that could clearly not have been achieved by any cheaper investment.

Still, these mergers keep going on. Look at Intel, buying McAfee at $7.68 billion. Are they going to come out with some major, game-changing security tech? Maybe, but I won't hold my breath. Intel's acquisition of Danish Giga was a huge disaster, resulting in the complete shutdown of the division 10 years later, with no products having been released. Or what about Time Warner vs. AOL, HP vs Compaq etc. etc.


My own theory of why this is happening: It is an ego stroke on the part of management. After all, management is often so disconnected from the actual work and value being created at the company, that they have very little direct influence on what is going on. In practice, they have a few buttons they can push - one of them is acquisitions.

In my opinion management is totally overrated. Success at the company is dependent on many factors, such as the talent of the workforce, timing, "viral effects", luck etc. I think the contribution of management to the success of supertanker companies like Microsoft, is way overrated.

Anonymous said...

"Before everyone dismisses this read this...." - complete BS article, the reason Skype's price per user should be down is because they realized that skype is not able to monetize users as much as they thought it would in 2005. So no, Ballmer overpaid big time, but who cares since board doesn't!
While hiding behind the rational that he is buying all these companies by double paying to keep them out of competitors, here are some acquisition suggestions and price points for Mr. Baldy:
Twitter: $20B (for $10B valuation)
Groupon: $30B (for $15B valuation)
Zynga: $10B (for $5B valuation)

Who wants to innovate, just throw some B's and buy them.

Anonymous said...

Anonymous@6:34: Agreed. In my checkered career, mergers were a sign of deep, deep rot, what management did when one (or more!) of the companies were no longer viable. I've worked at so many companies that went down for the third time after mergers that my resume runs to three pages, or did back when I still printed it out.

Cisco is supposed to be really good at acquisitions. The difference is that they pick 'em small, vet the engineers intensely before acquisition, and work hard on integration. Acquisitions aren't mergers, and aren't held out as such.

The other interesting exception is Google/YouTube, where YouTube is still run at arms' length, maintaining a separate brand name, office, and ethos. It's not so much a merger as a confederation.

Microsoft has already failed the first -- company too big, vetting too small. I doubt they have any intention of doing the second. So we're back to the classic merger model, where all work ceases for at least six months while the mergees explain what the hell they do to the merger's management. Next comes years of the merger company's engineers thwarting product development at the mergees. The mergees *can't* contest the internal political wars that they must win to survive, because they don't have enough time to learn the unspoken rules before they're fighting for their careers and their technology. The whole reason the merged company was bought, because their technology was in some way superior to the in-house technology, vanishes in the turf wars. At long last comes cancellation and closure of the wretched stub of the acquisition.

HS @ Our Debt Blog said...

Do you Microsft employees realize Larry Page and Schmidt are laughing and celebrating right now?? they did this on purpose to your CEO!

Everyone there should email Bill Gates right now! you really need new leadership over there..

Good Luck
HS

Anonymous said...

In my opinion management is totally overrated. Success at the company is dependent on many factors, such as the talent of the workforce, timing, "viral effects", luck etc. I think the contribution of management to the success of supertanker companies like Microsoft, is way overrated.

I don't think you're completely wrong here. Similarly, executive pay in corporate America is way overinflated. In most cases of a highly compensated CEO, I bet if said CEO dropped dead today the company would hardly notice the slight dip in the road. So, just what does the CEO do to justify that salary?

Anonymous said...

Why doesn't anyone actually take action to topple the buffoon?

How do we get some shareholder action started here? Any advice from lawyers?

Anonymous said...

The problem is that, as soon as a company becomes successful, it gets infested with this huge "fat layer" of MBA's, lawyers, etc. who think they should be in charge of anything (as opposed to the techies). Of course, many techies don't have the skill to run a company, but that is also the case of a lot of MBA's, even if they dress better, making it less apparent in this case.

I work for another Microsoft-sized IT company, and management here (at least our country) is a total disaster, with a long series of horrible decisions. I don't understand how they can get away with this - if I performed anywhere near as poorly as them, I would have been sacked years ago.

On the mergers and acquisitions: Remember that the MBA-layer, lawyers, auditors etc. has a huge interest in as many as possible of these, since it generates a lot of work for them and justifies their existence. Often the 20% of the cost of the mergers can be in lawyers fees. I suspect that the MBA layer "trickes" the CEO/board into seeing a value in the merger. The CEO/board is happy that they can finally do something to change things, so they are easily convinced. And after all, it is not their money. So, why hasn't investers stopped this? I suspect investors are too passive - they hold so little stock that they have little influence or at least the amount of time they would have to invest into changing things wouldn't have enough on an impact on _their_ share holdings that it could be justified. Many of the investors are day-traders, or fibonacci-chart readers anyway so they couldn't care less. The institutional investors are managing other people's money so they might not be so interested either.

I could continue this rant for hours, but I think I will stop ;)

Anonymous said...

So, yes, $8.5bn is a crazy amount of money to pay for a company that, on the face of it, doesn't have as many users as MSN and doesn't make much/any money.

What it will (potentially) buy MS is the entry point to international phone networks all over the world. One thing that could hold Office365 back is the inability to provided hosted telephony (ie Lync as a hosted PBX), since most countries have arcane and stringent legislation regarding "telcos", and MS isn't in(or doesn't want to get into) that market.

Maybe Skype will do some semi-cool consumer stuff but in the same breath, give Office365 the ability to act as a global, pay-per-user, telephone system.

Worth $8.5bn? Hmmm, not sure - but maybe it's not such a throw away of cash after all.

Anonymous said...

"Why do we need this?"

Because MS is now so far behind Google thanks to Ballmer's ignorant leadership over a decade, that having it fall into their hands would have been a serious threat. And rather than deal with the cause (Ballmer is useless), the board did what it always does and agreed to just treat the symptoms.

Anonymous said...

"I've heard claims that Ballmer would pay almost anything for traffic acquisition to try to make Bing competitive (if completely unprofitable), but $8.5 Billion seems to be a little high even for him, don't you think?"

No, this is the bozo who was going to pay 40 billion for Yahoo's declining share.

Ballmer is a clown.

Anonymous said...

This comment might be offensive, so I myself am not offended if it is deleted.

Is it possible that Microsoft has a bit of disfunctionality passed down from Bill Gates himself, an unspoken corporate mission that all competition must be destroyed?

With this as a guiding principle, it makes sense. Buying Skype keeps it away from competitors. Absorbing it into Windows, and letting non-Windows versions fall behind, gradually makes using the non-Windows versions a "jarring" experience (referring to the DR-DOS days). This gradually deprives non-Windows computers of one more application ("cutting off their air supply" is the term I believe, referring to the browser wars days). Microsoft seems to be willing to compete in time frames of decades rather than years. A plan of action that might not bring results for decades does not seem out of character.

Anonymous said...

What it will (potentially) buy MS is the entry point to international phone networks all over the world. One thing that could hold Office365 back is the inability to provided hosted telephony (ie Lync as a hosted PBX), since most countries have arcane and stringent legislation regarding "telcos", and MS isn't in(or doesn't want to get into) that market.

Hate to rain on your parade, but it makes no difference whether you use Lync or Skype - as soon as you interconnect to the PSTN you are a service provider. For the business user Lync/O365 could use a 3rd party PBX like BroadSoft and implement RCC for call control. That sidesteps the regulatory issues, but reduces MS margin.

Anonymous said...

In three years or less, the:

- Independent Skype division will be gone and folded into Online or Office.
- Tony Bates will have left MS
- Most of the key Skype technologists will have gone to startups or Google
- MS will write off at least $5B in goodwill reflecting the difference between what was paid vs the actual inherent value.
- Google voice will have doubled its installed base
- Skype will have lost share
- Frank Shaw will pretend Skype wasn't a complete failure by arguing that some of the technology has been folded into other initiatives
- Craig Mundie will still be promising wonderful innovations that will help MS compete that never materialize
- MS stock will be <$20.
- Ballmer will stop mentioning Skype altogether, like he has aQuantive, and act like it never happened. He'll still be CEO and doing more stupid deals, and MS's decade long decline will continue.

Anonymous said...

Nobody was buying Skype except Microsoft

Way to go, Steve.

Anonymous said...

"Microsoft has some substantial challenges ahead with Skype, as noted by UBS analyst Brent Thill in a note to clients today. Thill noted that only five percent of Skype’s customer base are paying customers (9 million of 170 million connected users). Additionally, Skype’s revenue growth has been declining — it was 45 percent in 2008, 30 percent in 2009 and 20 percent in 2010."

It just gets better and better...

Anonymous said...

Get rid of Ballmer!

Facebook this, email this, make it get out there!

http://www.change.org/petitions/replace-steve-ballmer

Anonymous said...

I love Skype, it does cross-platform video chat very well. I don't think it's worth 8.5B though.

Anonymous said...

Hey Steve, now that the deal's in the bag, reveal the magic secret.

Tell us all; we're eager to learn. Just what is the justification for investing $8.5b?

What do you see that the rest of the World is missing? Enlighten us, we're all eager to learn from your genius.

Give us the concept about how we'll make money. Show us the high level take on the numbers, and watch 6.8 billion people around the globe slap their foreheads and shout "Doh! of course!!! Why didn't I see that? That's brilliant, it's inspired, I can see now why you make the big bucks and are in the role you are".

(Alternatively, fess up that you have no idea, and then apologize in public (by quitting) for how, in the space of a dozen years, you have managed to piss away a Monopoly, and made excuses for all the billion dollar businesses ideas that you have let others propogate that should have rightfully been MSFTs).

NBGPH

Anonymous said...

Open your dictionary and look up the word "bitter" and there you will see 3 photos: 1 of an ex-MS employee; 1 of a wannabe MS employee; 1 of a low-performing MS employee. The entry will also cross-reference the words "whining" and "sluggard" and have a link to this blog.

Don Rule said...

I feel so good for my friends working at Skype who had to leave Microsoft to really make this stuff work for users.

Based upon the experience of Lucent coming after us for codec patents, I wonder what the potential is for a really massive lawsuit over the IP in the Skype technology.

But I think that you are all missing the big news. Chromebook is probably pretty rough right now but it is a much bigger threat than VOIP from Google or Facebook.

Anonymous said...

Some random thoughts while reading the posts over the last 24 hours:

"...I hope, MS is going be a carrier of the future..."

"...We are pretty close to completing our own high speed dwdm network that cris-crosses the US and can carry terabits a second of traffic..."


I would think that a terabit network is the backbone. Getting the last mile is another story altogether. And if people think AT&T and Comcast are bad, can you imagine the complaints about a Microsoft carrier service? If you think it's hard speaking to a AT&T service rep now, when was the last time you tried calling Microsoft customer service?



"...It's about Ballmer's long-term aim to make Microsoft back into a hit brand with consumers..."

Look at our track record. We are NOT good with consumers. Kinect may be the exception (I'll concede that point before someone flames me on that one case). Can someone tell me how much incremental revenue these Microsoft retail stores are bringing in? Think about that in the context of the thought above on Microsoft being your internet and phone carrier.



"...there are a lot of smart people in Redmond who have thought this thing through..."

Why do the executives at Microsoft all think they have the exclusive on smarts? And the folks in the real world don't know what they are talking about? They must think that way if they never consulted for outside financial advice, and put this together in such a short time frame.

It's a scenario that has been played out time and time again. Skype will tell the new Microsoft bureaucracy, "Hey, remember you bought us for what we bring to the table."

Microsoft MBA weenie: "Yeah, the operative word is that WE bought YOU. So do things our way."

A year later, all of the Skype employees will quit as soon as the retention bonus hits their bank accounts.

Three years later, "Skype? What's Skype? Oh yeah, it's something they used in the old days, like the telegraph, right?"

Anonymous said...

SteveB: “We’re buying a company with EBITDA over $250 million"

At the height of the Internet bubble, it was common practice among the financial crowd to use EBITDA per share (rather than the traditional EPS) to justify the insane valuations of companies that were hemorrhaging money. People really wanted to believe that some stupid business was magical just because it involved the Web, so they found all kinds of implausible reasons to justify astronomical share prices. As the collapse of the bubble proved, it was the wrong way to compute valuations.

Valuing a busines is really very simple: If the money going out is bigger than the money coming in, then you're in trouble. You can hide the losses for awhile with clever financial shennanigans, and you can try to justify the losses with explanations about EBITDA, etc. But sooner or later, the money coming in has to exceed the money going out, or it's not a business; it is (at best) a hobby.

SteveB's remarks about why Skype was worth 8.5B reminded me of a scene from "Monty Python's Meaning of Life."

Hospital Administrator: Ah, I see you have the machine that goes "PING!" This is my favorite. You see, we lease this back from the company we sold it to; that way it comes under the monthly current budget and not the capital account. (The doctors and onlookers applaud.) Thank you, thank you. We try to do our best. Well, do carry on.

Anonymous said...

The Seattle Times says Bing will be being renamed Skype since Skype is in the dictionary and Bing is not.

Anonymous said...

"One that crossed my mind for sure. Isn't the fact that we have to go pay these outrageous numbers (yahoo, acquantive, skype) the most damning commentary on Craig Mu and the huge amount of money we are pumping into ms research? Kinect was an acquisition. Time to call bs on that model."

Agreed -- The number of researchers who will never impact a product at Microsft because they are either doing theoretical work or just not in tune with product teams is amazing. Keep the researchers that are contributing to current and future products, and send the rest back to academia.

Anonymous said...

So, just what does the CEO do to justify that salary?

Nothing, and that is the beauty of it.

If you have to justify your salary, then you'll be paid very little, if you don't have to justify your salary, then you'll be paid a lot.

Anonymous said...

The reason these kind of acquisition happens is because the board and the venture capitalist are the same group of people.

So if the VC needs to cash out, they get a public company to buy it.

It's the art of turning other people's money your own.

It's a great racket to be in on.

Anonymous said...

Has anyone else noticed that our share price has dropped $1 since the Skype news broke? 8.5 billion shares, $8.5B purchase price. Thus the market, in its wisdom, has valued this transaction at ZERO. Nowhere to go but up I guess ...

Anonymous said...

Skype is kind of the king of the VOIP world. Why is this so expensive? You are a bunch of idiots. If you are not happy with MS, leave now, you a bunch of extremly stupid idiots.

Anonymous said...

Larry Page has successfully conned our leader Ballmer who will bite on whatever bait is thrown his way....

Where is the accountability for acquisition failures such as Danger, aQuantive, etc?

One more mistake like this, and then Microsoft will be history. How long can Microsoft be dependent on Windows/Office filling its cash reserves to absorb such mistakes.

Anonymous said...

Reading this blog Microsoft's woes can be neatly summarized into a one liner:

Microsoft has piss poor management across the board.

That's what it gets for promoting idiots. Who's laughing at the review process now.

Anonymous said...

Maybe MSFT can buy AT&T and Nokia in a cash and stock deal. MSFT can then control a carrier and a hardware maker to go along with its Windows Phone software. MSFT can follow it up by buying ARM to bring low power chip development in house.

Imagine the super-exciting synergies that can be created and the opportunity for integrated experiences that this can enable.

j/k, but I bet Steveb is thinking about it right now.

Anonymous said...

In my opinion management is totally overrated. Success at the company is dependent on many factors, such as the talent of the workforce, timing, "viral effects", luck etc. I think the contribution of management to the success of supertanker companies like Microsoft, is way overrated.

Actually, my friend, I disagree. Success depends on good management. And failure falls on bad management. The latter is the cause of Microsoft's problems. You cite causes for outcomes that are 'beyond control' - viral, luck etc - sorry, not buying it. That is the victim mentality, not on the part of employees but the company itself - being the victim of "poor employee performance" cf. being accountable for poor manager performance.

SteveB is a great example. He blames everyone but himself for failures - customers, partners, employees, org structures - instead of taking it on the chin - 'mea culpa'

Anonymous said...

The "keep it away from Google" is pure baloney and classic main-stream-media hogwash. Google has Google Voice, which is doing quite nicely, thank you.

And doesn't MSFT already have Messenger that does do voice, video and chat???

As a Skype user, I'm totally pissed. Because an app that Just Works!, and Just Works! great, is now going to get all messed up, and yes, killed.

Seriously, WTF!!

Anonymous said...

I predict that BillG will come back in some capacity to save the day and shoot the stock back up - creating a unified strategy to encompass all of these overlapping technologies. Sounds like a great story line - doesn't it? :-)

Anonymous said...

Before everyone dismisses this read this: http://www.businessinsider.com/numbers-microsoft-skype-deal-2011-5?utm_source=Triggermail&utm_medium=email&utm_term=SAI%20Select&utm_campaign=SAI_Select_051111

Facebook could get it instead, sounds good, only $15 per non-profitable customer, nice brand, better than paying taxes, etc.. all excuses.

Being smart is recognizing that it is possible to win and still lose.

The smart play would have been to let google or facebook buy it, let it IPO- have it be the other guy to waste their time and money bidding up a business that lost money 4 out of the last 5 quarters.

If Steve keeps playing with fire and he is going to get everyone burned. What this deal says is the bankers are smarter than he is.

I'd be worried.

Anonymous said...

$8.5B for Skype? That could have been a $89K bonus for every Microsoft employee.

$212,000 per FTE before tax..

I would have wrote him whatever kind of video chat app he wanted.

Anonymous said...

Till now I thought aQuantive was a stupid deal. Now we show the world that we can do better than that... Way to go...

Anonymous said...

Congratulations to the private equity group that's going to pocket about six billion dollars on this flip. My sympathies to the people working at Skype, who didn't imagine in their wildest nightmares that they'd end up as a footnote in the decline of Microsoft.

Anonymous said...

This is no longer an insider blog with any kind of insight going on. It's a complete whiner-fest. Can I get some cheese with that? Oh wait, someone moved my cheese...

Anonymous said...

Hi Mini,

Most of the posts on this blog seem to be from people who seem to be very emotionally unstable.

For example, over the past 5 years, all we have heard on this blog is how MSFT is dead or a dinosaur, and how Ballmer is a dope.

Yet here are the facts:

Pre-Tax Profits:

2006 2007 2008 2009 2010 2011e

$18B $20B $24B $20B $25B $28B

In the last 5 years, MSFT has grown Pre-Tax Income by $10B. Today, Google earns $10B Pre-Tax. So, in effect, in terms of profits, in the last 5 years, MSFT has added another Google to itself.

So, it's really pathetic to hear all these posts throwing Ballmer down the drain. As if he destroyed the company like so many other CEO's did to their firms during the financial crisis. Even Warren Buffett "praised" Ballmer for the job he has done over the years in last year's annual report and turned down a good value deal to buy MSFT stock recently because of his friendship with Bill Gates. It's kinda hard to add shareholder value when you become CEO of a company that has a market cap in excess of $500B and at the time you earn $10B, with anti-trust lawyers in your face. All you can really do is attempt to make more profits, which he has done.

Just my take...

Anonymous said...

This is like a guy going through a mid-life crisis and buying an expensive convertible to try and regain his lost youth.

Anonymous said...

"Microsoft was a giant fending off tiny rivals in 1998 when the U.S. Justice Department accused it of breaking antitrust law.

In the 13 years since, Apple has gone from having a sliver of the personal computer market to dominating the world of mobile media with its iPhone and iPad.

Back then, Google barely existed. It now rules the search advertising market.

Microsoft is still a technology titan with its Windows operating system and Office productivity software, but is no longer a feared monopoly or leading edge innovator."

Credit:

DOJ 10%
Ballmer 60%
MS's culture 30%

IBM is now $5 billion away from joining Apple in surpassing MS's market cap. Will Google be next or Oracle?

Anonymous said...

"The downside is the company lost its tech visionary, he said.

"It doesn't feel like Apple," Anderson said. "It doesn't feel creative. It just feels like we took a fast follower company and then by losing the product guy, the tech guy, what are we left with? We're left with the operating guy."

Anonymous said...

“They paid a headscratcher of a valuation,” said Patrick Becker Jr., a principal at Becker Capital Management, which owns 1.5mn Microsoft shares.
“One of my big fears is that by the time they design this into Outlook, Xbox and their phone software it’s going to be overtaken by Google and Apple from a capability standpoint,” he said.
Becker said buying a software company should cost more like a multiple of five times revenue, which would imply a valuation closer to $4.3bn based on the company’s 2010 revenue.
“It points to them playing follow the leader, which is a very difficult game to play,” said Becker. “My disappointment is that I thought this was an area (in which) they had a fair amount of expertise. To go out and spend $8.5bn makes me wonder about internal execution. They obviously felt they didn’t have the product in house to compete with Skype, Google and Apple.”

Anonymous said...

Microsoft and Cisco CEOs have much in common


"John Chambers and Steve Ballmer have much in common. For more than a decade, both have run dominant, if rapidly maturing, tech juggernauts — Cisco Systems and Microsoft, respectively. And both have let down their shareholders. The difference is that one seems to have recognized the error of his ways and is repenting.

After years of frittering away Cisco’s cash on acquisitions and overpriced stock buybacks, Chambers has gotten religion. He’s paring back the company to focus on its core networking businesses and streamlining management ranks. As Chambers said on Wednesday, “We have acknowledged our challenges. We know what we have to do.”

Chambers has instituted a dividend. And if he can resist more of the shopping excursions that saw him spend $34 billion in the past decade, he may even manage to kick-start his stock after a decade of directionless returns.

Compare that with Ballmer. Just before Cisco released third-quarter results, Microsoft agreed to spend $8.5 billion on Skype. Without a serious financial rationale for the purchase of the Internet telephony group at 10 times sales, Microsoft took another leap into what Cisco’s Chambers used to call “market adjacencies.”

There may be some Skype synergy with Microsoft’s many products. But they are fuzzy, in the same way that Cisco’s lurch into the consumer business with the acquisition of cable set-top boxes and handheld video cameras was.

So what has made Chambers see the light, while Ballmer continues building an empire of adjacencies? After all, Microsoft’s stock has underperformed Cisco’s over the past 10 years. It’s down more than 25 percent, three times the drop in Cisco’s stock — though admittedly Ballmer instituted dividends years ago, which has made the total return less disappointing for investors.

One simple explanation lies in the shareholder base. Chamber’s decision to revamp the company came with activist investors circling. With no single major shareholder to protect him, Chambers grasped the risks of inaction.

Microsoft’s ownership, by contrast, is still dominated by its chairman and founder Bill Gates. He and Ballmer own more than $20 billion of Microsoft stock, giving them a combined stake bigger than 10 percent — something no outside investor could amass. With insulation like that, it’s no surprise Ballmer is still able to run amok.


MSFT $24.99 and dropping...

Anonymous said...

Quote of the decade courtesy of Brandon Watson:

“The question we have to ask ourselves – do we want to win or not?” said Watson in a chat with WinRumors. “If the answer is yes, you then ask if what you “have been doing in the past” is the best, most efficient path to get there. If not, make a change. Be different.”

Spot on. Make a change. Start with Ballmer.

KeithX said...

Contrary to many of the opinions here, this deal makes good sense to me. MS just filled a huge gap in their potential mobile / tablet OS: functional video chat. Skype also has the potential to link together a series of purely WiFi mobile phone plays. The NoSoft alliance could sell that world-wide. Here's a comment that lists many of the complaints about this deal, my thoughts follow.


"- Adds more debt to our balance sheet
- Detracts from profitability
- Further reduces average margin
- Overlaps existing products
- Gives us another non-contributing division when we’re still losing billions per year and having serious problems (i.e. RPS) with the Yahoo integration
- Doesn’t provide any immediate advantage for the two most serious threats we face: our nearly dead mobile effort and completely dead tablet one
- Gives Ballmer one more thing to divide his limited skill set over when he can’t handle what he has already
- Comes at the cost of not putting that $8.5 into things that didn’t have these attributes or providing a much needed dividend doubling to incent anyone to buy our long dead stock"


1) MS paid cash that was stuck overseas, not debt. They avoided US taxes on the $8.5B too, that's an immediate discount to the sale price.
2) It adds a break-even brand that fills a gap.
3) Margin drop on those revenues isn't material.
4) Brand and tech have future possibilities.
5) Mobile requires video chat, just forget that Live Win SpamBot toy.
6) NoSoft integration wouldn't require much effort from Ballmer personally.
7) MS stock will flatline faster than almost anyone imagines if the NoSoft partnership swirls down the toilet in 2012.

The aspect of the deal that I find most interesting and informative is that MS didn't use any outside advisors. Some here refer to that as foolishness on the part of Ballmer and the board. I can't see that because people at that level know how to avoid civil lawsuits and a foolishly willful waste of assets is a lawsuit magnet.

If the directors and management are not total fools, then they must be privy to specific plans to use the Skype brand and technology in a product that will be fairly easy to implement; mostly likely by NoSoft.

Anonymous said...

What's $8.5B more to a guy who has already obliterated nearly $100B shareholder dollars via buybacks while erasing $200B in shareholder value?

Steve is a failure as CEO. And he's taking the company and shareholders down with him.

Anonymous said...

Here are a few goals for this along with predicted outcomes:

Keep Skype out of Google's hands. [check]

Bring Skype users to Microsoft products [very likely]

Integrate Skype technology with Microsoft products [much tougher]

Manage not to destroy Skype's culture or business model [remotely possible, and I'm only saying that much because they're in Luxemburg]

Anonymous said...

Seems to me that as long as we keep it as a separate division (seems to be the plan) and focus on cool integration scenarios (Office, Phone, XBox, etc.) there is the very real possibility that 2 - 3 years from now we have a much more successful/compelling Skype with more users and revenue and more compelling Microsoft set of products and services, plus you've kept Skype away from Google/Facebook and we maintain the option to take them public again and make a nice return on the $8.5B. The key here is to make sure they stay distinct inside MSFT and we avoid our genetic tendency to absorb and re-write from the ground up just because we like the architecture diagram.

Anonymous said...

The problem is that, as soon as a company becomes successful, it gets infested with this huge "fat layer" of MBA's, lawyers, etc. who think they should be in charge of anything (as opposed to the techies). Of course, many techies don't have the skill to run a company, but that is also the case of a lot of MBA's, even if they dress better, making it less apparent in this case.

This is where the test team can be really valuable. We are really good at spotting hard-to-see problems early.

Many of us were aware of the infestation problem early-on. Of course, we all lacked the 'soft skills' and 'visibility' to do anything about it.

Anonymous said...

My own theory of why this is happening: It is an ego stroke on the part of management. After all, management is often so disconnected from the actual work and value being created at the company, that they have very little direct influence on what is going on. In practice, they have a few buttons they can push - one of them is acquisitions.

-

Next time we will buy him a Fisher Price Silly Sounds Giggy Remote to play with.

Anonymous said...

Microsoft's Biggest Acquisitions And What Happened To Them
What about ProClarity, DataAllegro, Stratature, Sybari and a host of others some of these did work out (maybe not yet paid off).

Anonymous said...

I remember a presentation at BlueHat a few years ago, where some French researchers had reverse engineered Skype to see what made it tick. In their analysis, they strongly recommended never letting Skype inside the corporate firewall. I wonder if that has been changed since then?

Anonymous said...

3 reasons I love this deal:

1. Will result in a lot of high performers leaving for other companies, reducing my likelihood of being binned in the bottom 7% bucket. Raise!

2. Will lead to further deterioration of puget sound residential real estate market. Rent reduction!

3. Reveals Andreesen Horowitz, and Silverlake as pathetic weasebags. Winning!

Anonymous said...

Unfortunately the deal is not bad enough to pump up the stock price. (Yes I said bad enough.)

The market is so down on MSFT that for the past 4+ years the stock has dropped after over performing market expectations, but actually bumped up after missing estimates.

Bad news *might*lead to a big shake up - which market psychology likes.

Anonymous said...

If however you 'leave voluntarily because your other choice is to be fired' and are granted a severance package in exchange for a 'but you'll never work for Microsoft again, or any contractor with Microsoft' - how does MSFT enforce this? Do they have some kind of black list database, against which the names of all hires at their contracting companies are compared? How exactly do they legally enforce it? In Seattle, that's not quite "you'll never work in this town again" but it's awfully close.

They place a DNR (Do Not Rehire) on your file, and they always check to see if there is a file before hiring anyone. I doubt it is 100%, there are probably cases where they change their minds, but that is how they keep track. Perfectly legal.

Anonymous said...

One can never misoverestimate the gross incompetence in judgement on the market and technology trends as demonstrated by SteveB and the senior leadership. I am sick.Dusting off resume now.

Anonymous said...

I have made my living with Microsoft tools for a decade now, and almost always thought highly of the company.

For the last year or so I have been increasingly nervous about a) Microsoft's ability to remain compelling and relevant with decision-makers and check-writers and b) Microsoft management's general sanity.

This acquisition has my gut saying OK, it's time to accept it. Microsoft is rapidly becoming the Scully Apple, the pre-Gerstner IBM, the DEC of today. Giant slogging on momentum; ready for evisceration by the nimble barbarians. Saw so many pros who never could get off the legacy toolsets and were suddenly totally irrelevant in the market. Think I'm the only one coming to see Microsoft as such?

Look, if you're merely a peon, I guess you could say "what can I do about it"? That comes from fear of, well, losing your job: "if I speak up, I'll be U10ed" (or whatever the argot is). So... would you rather quietly hate your job but have your safe pretty pills and towels paid for by your employer - or tell the truth, push for change, and make life worth it? If you get fired for doing that, is Microsoft really a place you want to be anyway?? Here's the thing... unless something huge and radical changes at Microsoft, you guys are dead within the decade anyway, or far smaller by force. So either way, your job's at risk anyway, so you might as well suck it up and tell the truth. It's more important than another flatscreen TV or a $3,000 mountain bike.

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