Microsoft Going To Buy Skype for $8.5 billion

Internet/Computer giant Microsoft is going to buy Skype a social networking service for $8.5 billion,in its biggest-ever acquisition, placing a rich bet on mobile and the Internet to try to best rivals such as Google Inc
 In a deal that took over a month Skype outbid Google and Facebook which offer $3-$4 billion .

Microsoft's interest in the money-losing, but popular service highlights a need to gain new customers for its Windows and Office software. Skype has 145 million users on average each month and has gained favor among small business users.

Skype -- currently owned by a group led by private equity firm Silver Lake -- will become a new business unit within Microsoft, which will be run by Tony Bates, the company's current chief executive.

But investors expressed skepticism over the deal, sending Microsoft shares down 0.62 percent to $25.67. If those losses hold, the software giant's market value -- already exceeded by Apple Inc last year -- will slip behind General

Skype could be combined with Microsoft software such as Outlook to appeal to corporate users, while the voice and video communications could link to Microsoft's Xbox live gaming.

Skype also would offer Microsoft another route to develop its mobile presence, an area it has already put more energy and resources into as PC usage comes under threat.

Skype would become a new business division within Microsoft with Skype CEO Tony Bates in charge and reporting to Ballmer.