Microsoft's Hidden >20% Discount in the Purchase of Skype

I really liked Ars Technica's write up on MSFT acquiring Skype - and generally I have to agree. I think that Microsoft generally has enormous assets internally that they cannot properly leverage because they are too bogged down with the existing business lines, and Windows Live Messenger (too many names!!) which has more users TODAY than Skype would have in years, is a perfect example of that. You want Skype integrated into Xbox Live? Guess what already is ... Windows Live Messenger. 

However, there is a huge item that everyone seems to be ignoring that reprices the acquisition dramatically.

The deal consideration is $8.5 billion in cash, and because Skype is based in Luxembourg, Microsoft will be able to pay for the deal with cash that is abroad and has not been repatriated to the U.S. This is significant because it allows Microsoft to deploy foreign cash without incurring the taxes associated with repatriation. Repatriating $8.5 billion of cash to the U.S. would potentially result in a U.S. tax bill in excess of $1.5 billion. [Seeking Alpha]

This means that they were actually able to bid right down the center of what everyone else (Google, et al.) were going to bid as well.

That said, could they have put that $8.5 B to better use funding 8500 (!) European startups at $1M a piece and taking the GM of Windows Live Messenger and giving him/her reporting authority straight to Ballmer? You bet.