Report: Microsoft Nearing $7 Billion Deal to Purchase Skype

The Wall Street Journal, Bloomberg BusinessWeek and Reuters are all reporting that Microsoft is in the final stages of talks to purchase Skype from its current group of investors for $7 billion. The completion of the deal would see Microsoft acquire the largest VOIP operator in terms of customer base as well as serve as another addition to its wayward internet services group which includes the Bing search engine amongst other products.

The deal follows initial plans for the company to file for an IPO in August last year which were shelved with the installation of new CEO Tony Bates. The planned IPO was to have valued Skype at over $1 billion dollars with its current debt load sitting at $686 million as of December of last year. Skype currently offers service for mobile phones across major platforms and also counts select carriers as partners with Verizon Wireless in the US and Three in the UK/Europe offering Skype over their respective networks over a custom client which tunnels standard calls over 3G data networks on supported devices.

All of the reports take care to note that the deal could fall through anytime tonight, but should it be completed, an announcement is expected between tomorrow and Wednesday during rival Google’s I/O developer conference. With Skype, Microsoft is expected to have a further tool to draw customers to use its internet products and services such as Internet Explorer 9, Bing and Office via the Lync protocol, which bridges IM/Email/Voice services together seamlessly for interoffice communication.

During the initial IPO fervor last year, Skype suggested that it was looking to sell itself to the highest bidder for between $5-$6 billion which attracted the interest of Google, Cisco Systems and even Facebook before shelving those plans after talks led nowhere. With Microsoft leading the acquisition talks however, the software giant stands to gain a popular product that could be integrated across all of its product lines, from Office to Xbox Live and Windows Phone 7. For its part, Skype would be able to focus on developing its core product and protocol but it also stands to fall victim to the Microsoft Effect, most recently demonstrated with the acquisition of the Danger team in 2008, which led to the development of Kin before the team was scattered across the larger company due to the failure of the product.