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Skype-Microsoft deal: Keeping up with Facebook

Staring at the Skype logo on a blank screen

JEREMY HOBSON: There's word this morning that Microsoft is close to buying the Internet phone network Skype in a deal worth more than $8 billion. This would be the largest acquisition Microsoft has ever made.

Let's get reaction now from Henry Blodget -- the CEO of Business Insider. Henry, good morning.

HENRY BLODGET: Good morning.

HOBSON: Well, what would Skype give Microsoft?

BLODGET: Microsoft is under attack on many different fronts. One is Facebook and Apple and Google in communications, video, everything else. Skype is a very well known brand. It was the pioneer in voice over IP where people can talk to each other over their computers. It would give them hundreds of millions of users in a very strong brand in an area in which they are under attack.

HOBSON: And you mentioned Facebook and Google. Are those the companies that Microsoft sees as its competitors these days?

BLODGET: Increasingly yes. You go back about ten years -- Microsoft pretty much owned email with Exchange and Office. And since then Facebook is now where people are really setting up shop. We used to open up our computer and Windows was our base of operations. It's now increasingly people are spending their days working from Facebook. Anything that Microsoft can do to get back in between people and Facebook and their friends and everything else is good. And I think that's part of what they're seeing in Skype.

HOBSON: Now, this sounds like a big deal. We hear $8.5 billion floating around. But for a company like Microsoft, is this really that big of an acquisition?

BLODGET: It certainly not as big as it would be for you or me or any normal company. Microsoft is a company with almost $50 billion of cash sitting on its balance sheet. It has about $15 billion of free cash that it generates every year. So it's not huge. But at the same time it's not couch change either -- $8 billion is a big price tag.

HOBSON: Henry Blodget, CEO of Business Insider. Thanks as always.

BLODGET: Thank you.

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