Microsoft buying out Zoom is “highly likely” within the next year, said a source.
And it makes good sense why Microsoft would do such a thing.
Microsoft bought Skype, the video chat service back in 2011 for $8.5 billion.
During Covid quarantine around the world, Skype hasn’t been as popular as Zoom.
Zoom is the most popular videoconferencing service of choice from kindergarten teachers to yoga instructors to Fortune 500 companies around the world.
It allows you to mute someone if they’re being annoying, along with a slew of other services that Skype doesn’t offer.
Zoom’s stock has risen over 735% since March 2020, when Covid quarantine mandates shut down most of America and people needed a way to videoconference and do business online.
That’s a rise from $68 a share starting in January 2020 to over $568 at it’s height in October 2020.
Zoom’s market cap (a company’s worth), is currently $145 billion.
As of May 2020, accordingly to Motley Fool, Microsoft has a cash hoard of about $138 billion.
Buying out Zoom with an all-cash deal would decimate Microsoft’s cash hoard, not to mention most of their cash hoard is probably stuck overseas because they don’t want to pay repatriation taxes to bring them back to America.
Thus, an all-stock buyout might make more sense.
Microsoft’s market cap is currently $1.63 trillion as of October 2020.
Swallowing Zoom in an all-stock buyout would cost it about 8.5% of its market cap.
Microsoft can then combine Skype and Zoom into one mega videoconferencing behemoth that controls most of the world’s videoconferencing.
The economies of scope of services, pricing, customer-base, cost savings and synergies between departments would be tremendous.
It would be “yuge.”