Question of the Week: Did Microsoft Overpay for Skype?

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Microsoft unveiled its biggest acquisition ever this week, agreeing to buy Skype for $8.5 billion.

Everyone seems to have an opinion on the deal. Some have criticized it because of Skype’s lackluster financials. The Internet phone service provider is losing money. It recorded a net loss of $7 million last year on revenue of $860 million, despite the fact that its user base grew nearly 40% to 145 million, according to Thomson Reuters. Skype’s IPO has also lagged in registration since August. The sale to MSFT is about double the expected value of Skype if it had gone ahead with the IPO.

Skype’s investors have been chortling about how much they will gain on the sale. The company’s owners, led by Silver Lake, are expected to make more than 3x their investment. EBay said yesterday that it stands to make $1.4 billion on the sale of Skype.

Whether Skype will be a success for Microsoft remains to be seen. Do you think Ballmer & Co. overpaid?