Tag Archive: Technology


The deal is done. Microsoft is buying Skype for $8.5 billion in cash in its first sizeable acquisition since August 2008, when the Redmond software giant spent $486 million on Greenfield Online.

In fact, this is Microsoft’s biggest financial bet to date in terms of M&A, trumping its $6 billion+ purchase of aQuantive, which dates back to May 2007, in size.

The purchase price includes the assumption of Skype’s debt.

The agreement has been approved by the boards of directors of both Microsoft and Skype.

Skype will become a new business division within Microsoft, and its current chief executive Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Microsoft CEO Steve Ballmer.

The deal was first reported by GigaOM‘s Om Malik (he does that sometimes) and later confirmed by the Wall Street Journal, who cited people familiar with the matter.

The $8.5 billion question: did Microsoft overpay for Skype?

Perhaps, perhaps not. Only time will tell. As always with these things, the many tech industry pundits and analysts will look at this deal from all possible angles and then some, and still only a handful will end up being somewhat accurate when we look back in a couple of years.

From a non-financial point of view, the acquisition makes a ton of sense today, though.

Skype digitally connects dozens of millions of people on a daily basis, enabling them to communicate with each other through voice calls, chat messages and video conferencing.

There’s no doubt it’s a big brand on the Web (with both consumer and enterprise appeal, worldwide at that), and is poised to keep mattering in the next decade and beyond.

In August 2010, Skype filed to go public, expecting to raise $1 billion, but not long after appointing a new CEO, former Cisco SVP Tony Bates, the company put its IPO plans in the freezer while it looked for ways to generate more revenue from the popular service.

Skype’s 2010 revenue was $860 million, adjusted EBITDA was $264 million, and – as many are tripping over each others to point out – the company actually lost $7 million last year.

But looking ahead, chances for the business to keep growing, perhaps even acceleratingly so, are fairly big. In that sense, it’s a valuable asset to own (and to keep out of others’ hands).

The acquisition is subject to regulatory approvals and other customary closing conditions.

Microsoft and Skype said they “hope to obtain all required regulatory clearances during the course of this calendar year”.

Microsoft also pledged that it would “continue to invest in and support Skype clients on non-Microsoft platforms”.

Since its former owner eBay sold the company to a consortium of investors formed by Silver Lake Partners, Joltid (the company founded by Skype’s original founders, Niklas Zennstrom and Janus Friis), the Canada Pension Plan Investment Board and Andreessen Horowitz in November 2009, the company has been pursuing an aggressive strategy to be available everywhere, anytime, both in enterprises, the living room, even classrooms and, very importantly, on smartphones.

Microsoft, of course, has the exact same ambitions of ubiquity, and Skype and recently acquired Qik fit nicely into many of its current product offerings: think Windows Phone (combined with Nokia), Xbox and Kinect, Bing, Office 365, Windows Live Messenger and other Live products, Lync, Outlook, SharePoint, Internet Explorer, Azure, and so on.

The purchase also provides Microsoft with a wealth of p2p and collaboration technology expertise and intellectual property, an increasingly important asset to have these days.

It also brings reach: Skype’s user base is comparable to that of Facebook in terms of size (more than 600 million registered users, that is) and the social network in fact has tie-ins with Skype already on a product level.

Courtesy : Techcrunch

AT&T and Deutsche Telekom have entered into a definitive agreement for the sale of T-Mobile USA for $39 billion in cash and stocks. The combined customer base of this upcoming behemoth will be 130 million humans, though the agreed deal will have to pass the usual regulatory and closing hurdles before becoming complete. The two companies estimate it’ll take them 12 months to get through all the bureaucracy — if they get through, the proposed network merger will create a de facto GSM monopoly within the United States — but we don’t have to wait that long to start discussing life with only three major US carriers. AT&T envisions it as a rosy garden of “straightforward synergies” thanks to a set of “complementary network technologies, spectrum positions and operations.”

One of the other big benefits AT&T is claiming here is a significantly expanded LTE footprint — 95 percent of Americans, or 294 million pops — which works out to 46.5 million more than AT&T was claiming had it gone LTE alone. Of course, T-Mobile has never put forth a clear strategy for migrating to LTE, suggesting that AT&T plans on using the company’s AWS spectrum to complement its own 700MHz licenses as it moves to 4G. You might be groaning at the thought of yet another LTE band, but it’s not as bad as you might think: MetroPCS already has a live LTE network functioning on AWS, so there’s precedent for it. For further details, hit up the gallery below, the Mobilize Everything site, or the official press release after the break.

In the event of the deal failing to receive regulatory approval, AT&T will be on the hook for $3 billion to T-Mobile — a breakup fee, they call it — along with transferring over some AWS spectrum it doesn’t need for its LTE rollout, and granting T-Mo a roaming agreement at a value agreeable to both parties.

(Reuters) – Prices for key technology components extended gains on Tuesday, as damage at Japanese plants and infrastructure caused by Friday’s devastating earthquake and tsunami threatens to disrupt the global manufacturing chain longer than many had expected.

Dozens of Japanese firms from component makers to electronics firms and automakers are keeping their plants shuttered, while damage to infrastructure including power, roads, rails and ports will take months to repair.

The prospect of prolonged supply disruptions sent global companies scrambling for alternative sources of high-tech components in particular, a sector where Japan is still a dominant player.

Research firm IHS iSuppli said the quake and its aftermath could result in significant shortages of some electronic parts and lead to big price hikes.

“While there are few reports of actual damage at electronic production facilities, impacts on the transportation and power infrastructure will result in disruptions of supply, resulting in the short supply and rising prices,” iSuppli said.

“Components impacted will include NAND flash memory, dynamic random access memory (DRAM), microcontrollers, standard logic, liquid-crystal display (LCD) panels, and LCD parts and materials.”

Spot prices of NAND flash chips extended their gains on Tuesday, rising nearly 3 percent after a 20 percent jump on Monday, while DRAM memory chip prices gained 0.2 percent on top of a 7 percent on Monday, according to price tracker DRAMeXchange.

Japan accounts for one-fifth of the world’s semiconductor production, including about 40 percent of flash memory chips used in everything from smartphones, tablets to computers.

Even if shipments of semiconductor parts affected by the quake were disrupted for only two weeks, shortages and their price impact were likely to linger until the third quarter, iSuppli said.

TOSHIBA, SONY, CANON PLANTS DOWN

Demand for NAND flash memory chips has been surging, led by mobile devices and tablets such as Apple Inc’s iPad 2, which is estimated to have sold almost 1 million units during its weekend debut.

Toshiba Corp, which supplies about one-third of the world’s NAND flash memory chips, said it was still inspecting its System LSI factory in Iwate, the only one halted by the quake and tsunami and could not say when it might re-open.

The factory produces microprocessors and image sensors.

Fellow chipmaker Texas Instruments on Monday warned its two suspended plants would take until July to return to full production, though it had managed to re-direct 60 percent of their output to other sites.

Canon Inc said it may not be able to resume production at three factories making office equipment and lenses used in audio-visual players this week.

Sony Corp also said its eight factories making equipment ranging from optical devices, IC cards, blu ray discs, chip equipment and lithium batteries remained closed, with no guarantees on resuming date.

Taiwan’s Wintek, which makes the touch module for the iPad 2, said it had more than two weeks of inventory left and the short-term impact was limited. However, a source at the company said it was using Japanese components and was looking for secondary suppliers.

“There are alternative sources for Japanese raw materials and Taiwan is also capable of producing many of the components that we are currently importing from Japan,” said Luo Huai-jia, vice president of Taiwan’s electrical and electronic manufacturer’s association.

“We also have other sources such as France that we can tap if inventories tighten.”

Raj Kumar, general manager of Singapore GLOBALFOUNDRIES, said most of the company’s Japanese suppliers had alternative sources outside the country.

“We are not pushing them for updates, we have enough inventories,” he said. “Japanese people have the best record in bouncing back and we expect them to bounce back.”

Hynix Semiconductor Inc, the world’s No.2 memory chipmaker, said it had around two months of wafer inventory but a prolonged disruption in supplies of wafers by major producers such as Shin-Etsu may interrupt its production schedule.

Shin-Etsu said on Tuesday it had restarted one factory near Tokyo, but two plants near the worst-hit areas remained closed and the company was unable to say when production will resume at the sites. It is trying to boost production elsewhere to make up the shortfall caused by the shutdown.

Analysts estimate Shin-Etsu is the biggest supplier for Hynix, offering more than 50 percent of the South Korean firm’s wafer requirement.

“Since we have enough inventory, there’ll be no short-term impact but as the situation gets worse and prolonged, it could have a wide-ranging impact to the overall industry because Japan is a major wafer supplier. We are diversifying supply sources to non-Japanese firms including Korean firms,” said a Hynix spokesman.

Unlisted LG Siltron is a major silicon wafer supplier based in South Korea.

Chinese chipmaker SMIC said it saw minimal short-term impact from the disaster in Japan but was monitoring the supply situation.