Skype Said to Have Demanded More Than $7 Billion in Microsoft Buyout Talks

Skype Technologies SA’s owners refused to entertain offers of less than $7 billion, the value they expected the startup to get from a planned initial public offering, before agreeing to a buyout from Microsoft Corp. (MSFT), according to people with knowledge of the talks.
Microsoft Chief Executive Officer Steve Ballmer clinched the $8.5 billion all-cash agreement May 9, just more than a month after his initial overture to private equity firm Silver Lake, one of Skype’s biggest owners, said the people, who asked not to be identified because the talks were private.
“Microsoft really wanted this,” said Matt McCormick, a money manager for Cincinnati-based Bahl & Gaynor Inc., which oversees $3.6 billion, including Microsoft shares. “Microsoft right now is trying to do things to keep up with other faster- growing technology companies.”
Ballmer, 55, is making Microsoft’s largest acquisition on a wager he can use Internet calling to play catch-up in mobile and Web advertising. He offered more than $7 billion to cover Skype’s debt and keep a rival from gaining a business that would add calling features to games, e-mail and software on computers and handsets. While Google Inc. (GOOG) expressed interest, neither it nor other bidders made formal offers, the people said.
Microsoft, based in Redmond, Washington, is making the biggest Internet takeover in more than a decade, part of an effort to lure Web users and advertisers and help it catch Google in online advertising and Apple Inc. in mobile software.

‘Needed Kick-Start’

Ballmer plans to connect Skype, which boasts 170 million active users, to Microsoft’s Outlook e-mail, Xbox game console, Windows mobile phones and corporate-phone software. Skype offers voice and video calling over the Internet.
“This could give Microsoft a much-needed kick-start” in telecommunications, said Paolo Pescatore, an analyst at CCS Insight in London. In voice services, “Skype has certainly set the benchmark and gained a lot of traction.”
Microsoft was already negotiating a partnership with Skype when Ballmer kicked off takeover discussions. He said in an interview that he opted to pursue an acquisition after consulting with the leaders of the Office and Windows divisions.
Ballmer said he then directed Chief Financial Officer Peter Klein to make an unsolicited takeover offer to Silver Lake. Talks began in late March, the people familiar said.
Ballmer led Microsoft’s efforts and kept the plans secret outside of a small team, which included Microsoft Business Division Chief Financial Officer Amy Hood and Marc Brown, who oversees corporate development, one of the people said.

No-Shop Clause

Microsoft’s negotiators insisted on a no-shop clause, which barred Skype from seeking other bidders, according to one person familiar with the matter.
The parties agreed on a price in mid-April and signed the deal the night before it was announced. Microsoft paid a high premium in part because it expected the stock to rise after the IPO, meaning it would cost more to acquire Skype down the road, two of the people said.
“Microsoft was the only serious bidder at that number,’’ Marc Andreessen, co-founder of Skype investor Andreessen Horowitz, a venture capital firm, said in an interview.
Skype’s backers also talked with Google but didn’t get to discussing a price, and no formal offer was made, two people said. There were no other serious offers, one of them said.
The deal will add to Microsoft’s profit in the year after it closes, Ballmer said in an interview yesterday.
Microsoft slipped 16 cents to $25.67 yesterday in Nasdaq Stock Market trading. That left it down 8 percent this year.

‘Deadly D’

Microsoft also may get a tax benefit from the deal. Klein said the company will pay for the purchase using cash held overseas, freeing it from having to pay taxes associated with bringing cash into the U.S.
The company may use a technique known as the “Deadly D,” named for a section of tax law, that can help reduce taxes in cases where a U.S.-based company makes a foreign acquisition, said Robert Willens, who owns a tax consulting firm in New York.
“As far as the tax implications, this is a sweetheart deal,” Willens said. “This will be seen as a real important aspect of deal and will make Microsoft investors more comfortable with the transaction.”
Skype CEO Tony Bates will be president of the Microsoft Skype Division, reporting to Ballmer. The agreement was approved by the boards of both companies. Microsoft expects to receive regulatory clearance for the purchase this year.
Skype was founded in 2003 by Niklas Zennstrom and Janus Friis. The founders sold the company for $2.6 billion in 2005 to San Jose, California-based EBay Inc., which in turn sold off most of its stake four years later. Current investors include EBay, Silver Lake and Andreessen Horowitz.

IPO Plans

A purchase by Microsoft would divert unprofitable Skype from a plan, announced in August, to sell $100 million of shares in an IPO. The company has struggled to convert users of its free PC-to-PC phone services into paying customers, according to a March regulatory filing. The company has 663 million total users, most of whom aren’t active callers.
The purchase of Skype surpasses Microsoft’s acquisition of AQuantive Inc. for about $6 billion in 2007. It’s also the biggest takeover of an Internet company since the dot-com bubble 11 years ago, data compiled by Bloomberg show. Microsoft abandoned an unsolicited effort to buy Yahoo! Inc. for as much as $47.5 billion in 2008 and instead struck an agreement to provide search services on Yahoo’s pages.
Microsoft offers corporate telephone services through its Lync product, as well as consumer video-chat products as part of its instant-messaging software and Xbox online service.

Skype as Verb

Tightly integrated Skype services could be an added selling point for Windows Phone, the mobile operating system Microsoft is promoting as to vie with Google’s Android and Apple’s iOS, said Colin Gillis, an analyst at BGC Partners LP in New York.
Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM) advised Skype on the deal. Skadden, Arps, Slate, Meagher & Flom LLP provided legal advice to Skype’s founders. Microsoft declined to disclose its bankers. Simpson Thacher & Bartlett LLP and Covington & Burling LLP are providing legal advice to Microsoft, and Sullivan & Cromwell LLP is advising Skype and Silver Lake.
Bloomberg LP, which owns Bloomberg News, is an investor in Andreessen Horowitz.
Skype has more than $800 million in annual revenue, Ballmer said yesterday. His forecast for Skype’s impact on earnings refers to profit excluding certain costs.
Microsoft is planning to keep and promote the Skype brand.
“We love the Skype brand -- it’s a verb, for gosh sakes,” Ballmer said in the interview.

A better way to play your music. - Google Music Beta

Visit here - music.google.com/

Upload your personal music collection to listen anywhere,

keep everything in sync, and forget the hassle of cables and files.

As anticipated, Google unveiled their music service today at their I/O conference, Music Beta. The emphasis is on the “beta” right now as Google clearly isn’t launching the full service they had wanted to — you can thank the music labels for that. So how is it? What does it look like?

We’ve been granted early access to the service and have done a quick walkthrough. Below, find some screenshots of how it will work. As Google notes:

    * Welcome to Music Beta, a new service from Google that lets you store your personal collection online and access it instantly without the hassle of wires or syncing.
    * Enjoy your music anywhere — listen on any web browser or your smartphone or tablet running Android 2.2 or higher.
    * Save your favorite albums, artists, and playlists on your device so you can keep listening even when you’re not connected.
    * Create your own custom playlists or build them automatically from a single song.

A few other quick notes: this is U.S.-only for now. There are a handful of free songs that you can get on the service to get your started. And yes, Flash is required for it to work.
service to get your started. And yes, Flash is required for it to work.

Google Apps For Business To Go Paid From May 10 In India

Google Apps for Business, the browser-based office suite that revolutionised the way start-ups and SMBs use e-mail and productivity applications at work, will soon go paid for any business with more than 10 users in India. Google Apps offers online solutions for e-mail, document editing, spread sheets and calendar management and collaboration with Gmail, Google Calendar, Docs and Sites. These web-based tools are hosted by Google itself and help streamline setup, minimise maintenance and reduce IT costs. Google claims that over three million businesses run Google Apps today.
Earlier, Google Apps for Business offered business users 100 e-mail IDs for free. Now, business users signing up for Google Apps for the first time after May 10, 2011 will be asked to use the paid Google Apps product if they have more than 10 e-mail accounts.
The website has not yet announced the change, but an e-mail message sent by the Google Apps Team reads: “We recently announced upcoming changes to the maximum number of users for Google Apps. As of May 10, any organisation that signs up for a new account will be required to use the paid Google Apps for Business product in order to create more than 10 users.”
Existing businesses will be able to continue to use Google Apps without being charged. Think of it as a bonus for adopting the cloud service first.
Globally, Google Apps for Business announced that it was going paid in 2009. It charged an annual fee of $50 per user, according to this pricing chart.
How does Google Apps differ from Google Apps for Business? While the former is a free service that allows anyone to activate up to 50 accounts and offers messaging apps, customised e-mail accounts for domains, Google Calendar and mobile access to the services, Google Apps for Business offers an additional set of security and support services.
Features such as Google Video for Business and Google Groups for Business are offered on Google Apps for Business. It also provides 25 GB e-mail storage per user, as well as enhanced support and security features. For example, with more administrator controls, you can enforce SSL, which means when you connect to your e-mail and data which are hosted online, the connection is always secure and hackers or IP thieves will not be able to access and steal company information. Various banks currently use SSL to secure online banking transactions.
By setting the required custom password strength, you will be able to ensure that employees’ e-mail inboxes are protected against information theft.
Google also offers 99.9 per cent uptime guarantee and 24/7 support, besides interoperability for Blackberry and Microsoft Outlook users.
A direct competitor to Google Apps for Business is Microsoft’s Office 365 and the tech giant had recently  launched a public beta in India. Office 365 is Microsoft’s online productivity suite, which combines Office Web Apps, Exchange Online, SharePoint Online and Lync Online into a cloud service.
Office 365 is a paid service for an average of Rs 270 per user, per month, starting at Rs 90 per user, per month for instant messaging and presence applications. And more than 150,000 organisations have signed up to test it so far, the company has revealed.

Facebook, Google mull Skype deals: sources

Facebook and Google are separately considering a tie-up with Skype after the web video conferencing service delayed its initial public offering, two sources with direct knowledge of the discussions said.

Facebook chief executive Mark Zuckerberg has taken part in internal discussions about buying Skype, according to one of the sources. Another source said Facebook had reached out to the Luxembourg-based company about forming a joint venture.

Google has also held early talks for a joint venture with Skype, the second source said.

A Skype deal could be valued at $US3 billion to $US4 billion, the first source said. Skype's IPO is expected to raise about $US1 billion, several other sources said.

The discussions are in early stages, and it is not clear which option the companies favour, the first two sources said.

Although an IPO is still in the cards for the second half of 2011, Skype remains in discussions with other companies, two of the sources said. If it goes through, a Skype IPO would be one of the most hotly anticipated debuts by a US technology company this year.

Securing Skype as a partner would expand Facebook's user base, help it grow in international markets where Skype is popular, and give its half-billion users another reason to remain active and connected to its online community.

Analysts say a tie-up between Facebook and Skype would make more sense than one with Google, which already has a similar service - Google Voice.

Skype and Google declined to comment. Facebook was not immediately available to comment. The information is not public and the sources declined to be named.

Good timing

With a partnership, Facebook can tack another service onto its ever-expanding menu - a crucial feature given that many mobile devices, including tablets, now come equipped with front-facing cameras.

"This is very synergistic," said Trip Chowdhry, an analyst with Global Equities Research. "It puts Facebook two steps ahead of Google because of the number of Skype users."

"In your social network, you will now have another very compelling service - Skype," he added.

Last year, Skype had about 124 million connected users every month by the end of June. But 8.1 million were paying customers, using Skype to make calls to traditional phones at discounted rates.

Analysts have said that while Skype's growth has been impressive, investors would be cautious about its prospects for revenue growth due to the size of its base of nonpaying customers.

The company was founded in 2003. eBay bought it in 2005 for $US3.1 billion.

In 2009, eBay sold a majority stake in Skype to an investor group that included Silver Lake, the Canada Pension Plan Investment Board and Andreessen Horowitz for $US1.9 billion in cash and a $US125 million note. eBay retained about a third of the company.

Handicaping the IPO

Last August, Skype filed a registration statement to go public. The October appointment of a new chief executive, Tony Bates, a former senior vice president of Cisco Systems, put the eagerly anticipated IPO on hold until the second half of 2011.

But rivals including Apple and Google have marched into Skype's territory, undercutting the value of the pioneer service.

Now, Skype might again change hands.

Although Facebook and Skype would benefit from each other's large community of users, neither has proven revenue models, said a separate source familiar with the companies.

For Skype, the clock is ticking, as large social media and software companies pour into the public markets.

On Wednesday, shares of Renren, China's largest social networking company, surged nearly 57 percent in its first day of trade.

LinkedIn said on Wednesday it would list its shares on the New York Stock Exchange. The social networking site for professionals filed to raise up to $US175 million in an IPO expected later this year.

The flood of internet public offerings this year will give Skype backers a clearer sense of its prospects, another source said.

"When a company is not going public and it has been on file for a long time, one way or another something is going to happen," that source said.

Google Introduces Search Globe (3D visualization of searches with Search Globe)

  Google has launched a new experimental search tool. Called Search Globe, it will visualize people’s curiosity with pinpoints related to the volume of searches grouped by languages.

The Google Data Arts Team, who created Google Body, harnessed the modern browser’s ability to generate fast 3D imaging with WebGL to display a colorful globe that represents the day-to-day searches by people all over the world.

“The Search Globe visualizes searches from one day, and shows the language of the majority of queries in an area in different colors. You’ll see a bright landscape of queries across Europe, and parts of Asia for instance, but unfortunately we see many fewer searches from parts of the world lacking Internet access—and often electricity as well—like Africa,” explained Valdean Klump of the Google Data Arts Team in a blog post.

Search Globe is open source, and can be used here. Note that you will need a WebGL browser, such as the latest build of Chrome or Firefox 4, to use the tool properly. The 3D tool that navigates the human body is here.

As a side note, if you have problems getting the Search Globe to work, you may need to update your video drivers. This seems to be a common issue for some users.

Google’s Panda Update Cripples Open Publishing Competition

This is a guest post by HubPages CEO Paul Edmondson. Prior to founding HubPages, Edmondson was part of the executive team at MongoMusic, which was acquired by Microsoft in 2000, and held group management positions at MSN Entertainment over product management, quality management, operations, and business management.

Search engines are a critical part of the democratization of the Web and none is more important than Google. They provide the critical gateway to information in a meritocratic way that has traditionally rewarded usefulness and quality over name recognition of the content creator, valuing the utility to the searcher over all else.

In parallel, open publishing platforms have provided free tools for creating and sharing information with topical expertise and a voice to anyone on the Web. These platforms feed the search engines and, in return, the search engines have delivered steady audiences. This ecosystem has been lucrative for the search engines, an essential outlet for the information sharers, and a great way for the world to have access to a broad swathe of information, from the full range of political opinions to thousands of ways to barbecue a chicken.

Google’s recent “Panda” update intentionally upends this ecosystem; it doesn’t just lower the rankings of individual pages that the algorithm deems “low quality” (however that may be defined by Google) but, as Google has said publicly, “low-quality [page] content [on the domain] can impact an entire domain.” This means that high-quality content hosted on open publishing platforms like HubPages and YouTube can be negatively impacted in their search rankings simply by hosting contributions of various quality on a single site.

HubPages has seen a negative impact from this change, but so far YouTube has not (Search Metrics Winners). One presumes Google isn’t treating its own affiliated sites differently than any other site, but YouTube’s open publishing environment makes low-quality content as prevalent as on any other moderated open publishing platform. Google shows over 13 million indexed videos on YouTube for lose weight (known spammy area) and over 10 million for forex (another spammy area). Apparently, Google’s Panda update has been punitive only to platforms other than Google’s.

We certainly support and encourage changes to algorithms to provide the public with access to the best search results. We appreciate that open publishing platforms with a wide range of content quality also have a responsibility to moderate their content appropriately. While we understand the need for ordering search results, we also think it is a mistake to broadly impact an entire domain negatively where the content has been contributed by individual people. Bear in mind that a lot of the content on open
publishing platforms like HubPages and YouTube is great, and it is exactly what people are searching for on the Web.

We have reached out to Google seeking feedback and guidance about what elements of an open platform are being penalized by Panda. There has been little response to our inquiries, from questions about site architecture posted on the official Google forums, to personal emails sent to Matt Cutts, the head of web spam at Google.

We, as well as many other operators, are happy to engage in a dialogue with Google on what quality means and how to educate information sharers. It seems that publishing platforms that
are not operated by Google are at a distinct disadvantage when it comes to guidance on how to adjust to this latest search algorithm update, as is exemplified by YouTube’s apparent immunity.

Before Panda, Google gave open platforms of all sizes many ways to separate high quality content from poor content without chilling an entire domain. In this respect, HubPages most closely resembles YouTube’s site structure. We send Google signals by how we program the site. For example, we let Google know what we think is the best content by giving that content more internal links from related pages. We also follow the sitemap protocol and give content a crawling priority. It seems these efforts are severely discounted after the Panda update since, despite their application, there is still a domain-wide devaluing being applied.

We are concerned that Google is targeting platforms other than its own and stifling competition by reducing viable platform choices simply by diminishing platforms’ ability to rank pages. Google is not being transparent about their new standards, which prevents platforms like ours from having access to a level playing field with Google’s own services. We want to comply with and exceed Google’s standards. Google has my contact information. Hope to hear from them soon.