Facebook and Google Fighting to Scoop up Skype

by Matt Klassen on May 6, 2011

For the last several months the popular web video conferencing service Skype has been preparing to go public, despite persistent rumours that other larger fish in both the social networking and communications markets are pondering acquisition agreements with the Luxembourg Company. In fact, in the late stages of summer 2010, when Skype first began assembling its Initial Public Offering (IPO), several interested suitors were bandied about, including both Cisco and Google.

It was in October, however, that the hiring of new Skype CEO Tony Bates saw the much anticipated IPO put on hold till the second half of 2011, and with the delay several familiar faces are now entering the fray once again in hopes of scooping up Skype.

In fact, Reuters has reported that both Google and Facebook are in separate discussions with the VoIP service, pondering either an all out acquisition of the service or some mutually beneficial joint venture. But with the market now flooded with VoIP options, is Skype still worth the money that such a deal would command, or can Facebook and Google do better with their own respective projects?

It’s amazing to see just how much nine (9) months can affect the overall valuation of a company. Back in September, as the rumours around Cisco and Google vying for Skype’s affections swirled around the blogosphere, the estimated value of the company was somewhere in the neighbourhood of five (5) billion dollars.

Now, with the market flooded with VoIP options, with the likes of Apple and Google offering their own services that have significantly undercut Skype’s market domination, and less than a year later the estimated value of the VoIP company has dropped significantly, by one or two billion dollars.

While a price tag of three or four billion is still more than most of us can fathom, if ever the time was right for a company like Facebook or Google to acquire Skype, it would be now. It’s always tough to gauge what will happen when Skype goes public, and with Skype still planning to go forward with its IPO later this year, it seems the clock is ticking for all parties involved.

As expected, all parties have declined to comment, but Reuters has stated that all talks in the preliminary stages anyways, so we shouldn’t expect to hear anything for quite some time. Further, as I mentioned back in September, don’t expect any sort of acquisition deal to go smoothly, as Federal regulators closely scrutinize all such deals for antitrust concerns.

Regarding Skype, the company is clearly at a crossroads, as going public now may not be as beneficial as it could have been several months ago. If the company does go public and fails to meet expectations, a profitable sale or partnership may be harder to manufacture, while the longer it waits, the more the public market is being filled with other interesting social media and communications investment opportunities.

In the end, though, the question remains, is Skype worth it? In my mind, while Skype may still be the ubiquitous choice for free VoIP services, its far from the only choice, and with Google already having its similar Google Voice service and Facebook rumoured to be creating its own voice service, the dollars and cents don’t really make sense.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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